Consequences of Not Filling IT Return or Late Filling IT Return

Income Tax return filing is mandatory if the Total Income of an Individual exceeds the maximum amount which is not chargeable to income-tax i.e. Rs.2,50,000 for individuals whose age is less than 60 Years under old tax regime and Rs. 3,00,000 under new tax regime

It is also mandatory to file Income Tax Returns in following cases:-

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• If a person is a resident and ordinary resident in India:-

a) Who holds any asset (including any financial interest in any entity) located outside India; or

b) is a beneficiary of any asset (including any financial interest in any entity) located outside India; or

c) Who has signing authority in any account outside India; or

• If Individual has deposited greater than Rs.1 crore in aggregate in his Bank Current Accounts; or
• If Individual has deposited greater than Rs.50 lakhs in one or more saving bank accounts; or
• If Individual has incurred expenditure greater than Rs.2 lakhs for Foreign travel; or
• If Individual has incurred expenditure greater than Rs.1 lakhs towards electricity consumption; or
• If Total Sales, Turnover or Gross Receipts exceeds Rs.60 Lakhs; or
• If Total Gross Receipts in the Profession exceeds Rs.10 Lakhs; or
• If Total Tax Deducted and Collected at Source (TDS / TCS) is Rs.25,000 or more (Rs.50,000 in case of resident senior citizen)

Below mentioned are benefit of Filling IT Return

• Filing Income Tax Returns Avoid late fees under 234F i.e upto Rs. 10,000
• Avoid Tax Notices.
• For claiming of Tax Refund.
• Carry forward losses to next financial year i.e house property and depreciation.
• It will help Individual in loan processing, business loan, home loan etc. Individual will easily get credit card. Individual will easily get study loan and foreign VISA.
• For Income Proof and Address Proof.

Consequences of Not Filling ITR or Late filling of ITR

• Many people came up with a query that what will happen if we do not file the Income Tax Return by the aforementioned deadline. There are many benefits of filing the Income Tax Return. But, we are discussing only the adverse consequences of Non-Filing of the Income Tax Return which is:
• Penalty under Section 271F of Income TAx Act, 1961,
• Interest under Section 234A of Income Tax Act, 1961,
• Non-Carry Forward of Losses,
• Best judgment assessment (Assessment under section 144),
• Claim of Refund of Taxes,
• Penalty for Concealment of Income and Prosecution for Failure to Furnish Return of Income.

1) Penalty under Section 271F of Income Tax Act, 1961:

If a person fails to furnish return before the end of the relevant assessment year, the assessing officer may levy a penalty as follows:

Date of Filing Fees Leviable If the return is furnished after the due date of filing but on or before the 31st day of December. Five thousand rupees (Rs. 5000) In any other case  Ten thousand rupees (Rs. 10,000)

Note: If the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.

2) Interest under Section 234A of Income Tax Act, 1961

Default in the furnishing of the Income Tax Return may attract Interest u/s 234A. If there are any taxes which are unpaid, penal interest @ 1% per month or part thereof will be charged till the date of payment of taxes.

3) Non-Carry Forward of Losses

You will not be able to carry forward losses If the return of income is not filed within due date. However, the loss under the head “Income from house property” can be carried forward even if the return of income/loss of the year in which loss is incurred is not furnished on or before the due date of furnishing the return, as prescribed under section 139(1).

4) Best judgment assessment (Assessment under section 144)

The Assessing Officer is under an obligation to make an assessment to the best of his judgment in the following cases:

– If the taxpayer fails to file the return required within the due date prescribed under section 139(1) or a belated return under section 139(4) or a revised return under section 139(5).

– If the taxpayer fails to comply with all the terms of a notice issued under section 142(1) or

– If the taxpayer fails to comply with the direction issued under section 142(2A)

– If the taxpayer fails to comply with all the terms of a notice issued under section 143(2)

Thus, Non-Filing of the Income Tax Return may result in the Best Judgement Assessment. This is an assessment carried out as per the best judgment of the Assessing Officer on the basis of all relevant material he has gathered.

5) Claim of Refund of Taxes In case your tax payable is less than the TDS already deducted, Assessee can claim the refund of such excess TDS by filing Income Tax Return. Income Tax Return must be filled to claim the refund of TDS. Further, assessee are eligible for Interest @0.5% per month or part of the month on refund amount as per Section 244A.

6) Penalty for Concealment of Income

If Assessee have taxable income and do not file the return of Income assessee may end up paying penalty for concealment of Income. In such cases  Penalty u/s 270A is for under-reporting and misreporting of income will be levied. Thus, where no return of income is furnished and later assessee are assessed at income higher than maximum amount not chargeable to tax you may end up paying a heavy penalty.

7) Prosecution for Failure to Furnish Return of Income

In case assessee fail to furnish the return of Income, don’t be surprised if you receive notice of prosecution u/s 276CC. Section 276CC provides for rigorous imprisonment for a term up to 7 years and fine.