What Happens If you don’t file Your ITR?

Income tax is a direct tax that a government levies on the income of its citizens. The Income Tax Act, 1961, mandates that the central government collect this tax. Taxes are sources of revenue for the government. The government utilizes this revenue for developing infrastructure, providing healthcare, other government welfare schemes. Before we enter into the topic that is “what happened if you don’t file your Income Tax Return (ITR)?” first let’s see ‘Who are all eligible for the filing income tax return’. 

As per Section 139(1) of the Income Tax Act, 1961 state that –

  • Companies and Partnership firms including LLP filing of income tax return become mandatory
  • For Other Assessee (which include individual, salary person and small businessmen), if their gross total income before climbing the exemption under Capita Gain head is more than basic exemption limit then return filing, becomes compulsory.

In another way, we can say that a person who has a Total Income of less than 250000 then it’s not mandatory to file an income tax return for them.

  • From the assessment year 2020-21, the following person are compulsorily required to file the return:
  1. He has deposited amount more than one crore in aggregate in one or more current account maintained it banks or Cooperative Bank or
  2.  he has incurred foreign travel expenditure for more than 2 lakh for himself or any other person or
  3.  he had enquiry electricity expenditure of more than 1 lakh or
  4.  fulfils other conditions as may be prescribed.

Due date of Return filling:

Who is required to furnish a report of transfer pricing under section 92E30th Nov of the AY
A company Audit required under income tax act or any law working partner of a firm whose accounts are required to be audited30th Sep the AY
Others31st July of AY

Note: above due dates is subjected to an extended date for time being in force.

Now, let’s see what are the consequences of not filing ITR. Filing your ITR on time can benefit you in more ways and if you don’t file the ITR them you may lose your benefits. Those benefits are as follows:

Claiming refund of excess tax paid:

If you have a refund due from the Income Tax Department, you should file your Income Tax Return on time to receive the refund as early as possible.

Benefits of  carry forward your losses :

You will not be able to carry forward losses if the return of income is not filed within due date.

Approval of Loan:

Filing the ITR will help individuals when they have to apply for a vehicle loan i.e., 2-wheeler or 4-wheeler, House Loan etc.

Visa Processing:

At the time of the visa application, you require to furnish copies of your tax returns for the past years.

Valid proof of income:

ITR can be used as proof of your income as well as your Address which is mandatory when you apply for a loan or visa.

set-off of losses:

You cannot set off these losses against future gains if the return has not been filed within the due date. Losses incurred (other than house property loss) are not allowed to be carried forward to subsequent years. However, if there are losses under house property, carry forward losses is permitted.

Contributor to country’s development:

Filing income tax returns and paying tax to the government makes you feel proud and you can become a contributor to a country’s development.

Some other benefits are announced by the government in budget from time to time.

The consequences that you may face on not filing ITR on time:

Interest and penalty on the delay of filing return:

Interest can be levied under suction 234A/B/C/as prescribed. Effective from the financial year 2017-18, a late filing fee will be applicable for filing your returns after the due date i.e. 31 August 2019 under section 234F. The maximum penalty is Rs. 10,000.

Notice from the Income-tax Department:

 The Assessing Officer is under an obligation to make an assessment to the best of his judgment under section 144 (Best Judgement Assessments)  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 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). 

Hence, 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.

No Condonation of  delay in filing return due to some genuine reason:

As per section 119(2)(b) of the Income Tax Act 1961 the Assessing officer has the right to accept any application or request for any exemption, deduction or such other relief even after the expiry of the period given under the IT Act. And when the reason for not filing the ITR is genuine then by providing relevant supporting documents, the taxpayer can apply for condonation relief.

Penalty u/s 270A is for under-reporting and misreporting of income:

Where no return of income is furnished and later you are assessed at income higher than the maximum amount not chargeable to tax you may end up paying a heavy penalty.

Prosecution for Failure to Furnish Return of Income: 

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

So file your ITR and pay tax on time so you can avoide above consequeces and lets be a responsible citizen of coutry.

For any more information related to GST, IT Return, Filing, Registration, etc.. please feel free to contact us at SGR Consultancy OR you can also follow us on Facebook Page

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