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Tata Capital > Blog > Generic > What Happens If I Don’t File My ITR?

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What Happens If I Don’t File My ITR?

What Happens If I Don’t File My ITR?

"What if we don't file ITR?" is a burning question among taxpayers. And why wouldn't it be? After all, timely filing your income tax return (ITR) is essential. Not only can you take advantage of the numerous perks that come with it, but you can also avoid the penalties and late fines that you may have to pay if you fail to file the ITR on time.

If you too have been lately wondering, "What happens if I don't file my ITR?" you've come to the right place. So without further ado, let's get to the answers to your question, "What happens if we don't file ITR?" and get accustomed to the potential repercussions of failing to file ITR on time.

What Happens If We Don't File ITR?

#1. Late fees for late filing

To answer your question, "what will happen if I don't ITR?" Failure to do so may result in late filing fees of Rs 5,000 under Section 234F. However, if your total income is less than Rs 5 lakh, late fees are limited to Rs 1,000.

Although if your gross income is below the basic exemption limit, you will not be subject to a penalty for filing your income tax returns late.

#2. Interest on the tax amount

Besides the penalty, you will be charged 1% interest per month or part of a month (as per Section 234A) on the outstanding tax amount. This interest will be calculated from the due date for filing your return for the relevant fiscal year to the date you file your return.

For instance, your overdue tax for the fiscal year 2021-22 is one lakh rupees and the time to submit ITR is August 2023, but you pay it in March 2024, which is a 7-month delay. In that case, the interest payable will be 1 lakh*7% which is Rs 7000. This Rs. 7,000 is in addition to the tax you will pay in any situation.

Thus, the longer you wait, the more you pay.

#3. Loss of benefits

If you've suffered losses in the stock market, mutual funds, real estate, or one of your businesses, you can carry them forward and make a difference with the revenue from the following year. This greatly reduces your tax liability.

However, if the return has not been filed by the due date and the losses haven't been declared in your ITR, you cannot use these losses as an offset against future gains.

Although, losses may be carried forward if they relate to a house property.

#4. Unable to revise ITR

If the original return is filed within the due date, the taxpayer can file a revised ITR any number of times. However, if the initial ITR is filed late, the benefit of revising the ITR is lost.

As a result, while submitting a delayed ITR, the taxpayer should exercise extreme caution and make sure that the ITR is accurate in every way because errors in a belated ITR cannot be changed.

#5. Rigorous punishments

A major consequence of not filing an ITR on time is that income tax authorities will likely believe that an individual's motivation was tax evasion. As a result, they have the authority to apply a penalty under 270A for under-reporting income, which is equal to 50% of the tax evaded by the taxpayer due to the non-filing of the return.

They may also face rigorous imprisonment ranging from three months to two years and a fine based on the amount of tax evaded.

In Conclusion

By reading the above-mentioned consequences of not filing the ITR mentioned above, we hope you've gotten the answer to your question, "What happens if we don't file ITR?" and why it's in your best interest to file in time.

Besides, filing an Income tax return doesn't only help you with income tax exemption. It indeed helps you in many different ways. Some of which are:

  • Faster processing of loans
  • Ease in getting a visa
  • Better insurance cover
  • Tax deductions/rebates

While being responsible citizens, we must pay taxes and receive a return on them. Therefore, every individual must strike a balance between paying and collecting tax refunds.

So prepare to file your tax return and stay on the right side of the law.

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