Penalty for Late filing of Income tax return (2024)

Penalty for Late Filing of Income Tax Return (ITR)

Dear reader, in this article we are going to discuss the importance of filing an Income Tax Return on time. Consequences and penalty for late filing of Income Tax returns.

Filing of ITR on time i.e., on or before the due date is mandatory. ITR is required to furnish on or before the due date i.e., 31st July / 30th October of the Assessment Year.

Due Date of Filing ITR for FY 2023-24 (AY 2024-25)

For Individuals, HUF (whose accounts are not required to be audited): 31st July 2024

For Individuals / Companies/ Working partners of a Firm (whose accounts are required to be audited): October 30, 2024.

Due Date of Filing ITR for Financial Year 2022-23 (AY 2023-24)

For all individuals, HUF (whose accounts are not required to be audited): 31st July 2023 

For Individuals / Companies/ Working partners of a Firm (whose accounts are required to be audited): 30th October 2023

CBDT extends the due dates for filing of ITRs & Audit reports for AY 2021-22 vide Circular No.17/2021 dated 09.09.2021

Here, I will let you know, why you should file your tax return on time. You may face some adverse consequences in the form of penal interest or e-assessment notice from the income tax department or may be deprived of many benefits by not filing your tax return on time.

The due date for filing the income tax return for individuals for Assessment year 2024-25 is 31^st July 2024.

Consequences of Late Filing of Income Tax Returns

Below are a few consequences and disadvantages of late filing of Income Tax returns:

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No Carry Forward of Losses

No carry forward of losses would be allowed if you file your income tax return after the due date of filing.

As per existing income tax law in India, if you have a Business loss or loss under the head “Capital gain”, you can carry forward the loss only if file your income tax return on or before the due date.

Thus you cannot carry forward the following losses in case of late filing of income tax return:

• Loss from business & profession
• Speculation business loss
• Long-term capital loss
• Short-term capital loss
• Loss from owning & maintaining horse races

Loss of Interest on Refund

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Normally, interest on a refund is allowed for a period commencing from the 1st day of April of the assessment year to the date on which the refund is granted.

(Currently, the rate of interest on refunds is 6% p.a or .05% per month)

In case of a belated return (return filed after the due date), interest on the refund would be allowed from the actual date of filing the return till the date when the refund is granted.

Thus, a taxpayer who filed his tax return after the due date will not be allowed interest on a refund (if any) for the period of delay in filing the income tax return. In such a case, he would be allowed interest from the date of filing a belated return to the date on which the refund is granted.

Revision of Belated Return Not Possible

Revision of income tax return not allowed in case of late filing of return i.e., belated return.

If you file your tax return after the due date of filing your income tax return, you cannot file a revised return later in case you find any mistake or error in the originally filed return.

What is a Belated Return?

If the income tax return is not filed on or before the due date, a belated return under section 139(4) of the Income Tax Act, can be filed anytime on or before three months before the end of the relevant Assessment Year (AY).

For Example, for the AY 2023-24, the deadline to file a belated return is on or before 31 December 2023. 

Penalty for Late Filing of ITR under Section 234F

From the financial year 2021 onwards, as per section 234F of the Income Tax Act, filing your ITR after the due date can make you liable to pay a maximum penalty of Rs 5,000 (reduced from Rs.10000).

Late Fee U/s 234F

If ITR is filed before the initial deadline (31st July): No Penalty

If ITR is filed after the due date but before 31st December: Rs.5000*

If ITR filed after 31st December till 31st March: Rs. 5000/-

*However, as a relief to small taxpayers, the maximum penalty levied for delay will only be Rs.1,000 if the total income is less than or equal to Rs 5 lakhs.

Imposition of Interest under Section 234A

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Interest under section 234A is levied or imposed by the income tax department for default (late) in the filing of the income tax return.

If you have unpaid taxes that are outstanding to the income tax department and you have not filed your tax return on or before the due date, you will be charged with section 234A.

You will be charged interest @1 % per month or part of the month on the amount of outstanding tax. Interest will be computed from the due date applicable to you till the date of actual filing of the return.

Penalty under Section 271F

Apart from penal interest, there are other implications & consequences for late filing of tax returns.

Belated return for the financial year 2022-23, can be filed at any time three months before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier i.e., any time before 31^st March 2023.

However, in such cases, an income tax officer (AO) may levy a penalty of Rs. 5000 under section 271F.

Note: Normally penalty under section 271F is not levied in all cases and depends on the sole discretion of the income tax officer (AO).

Prosecution under Section 276CC

If the income tax authorities feel or have any reasons to believe that, the taxpayer willfully failed to furnish a return on time, may levy a penalty under section 276CC in cases where:

1. the amount of tax exceeds twenty-five lakhs (25 lakhs)- with rigorous imprisonment for a term ranging from six months to seven years with a fine,
2. in other cases – with imprisonment for a term of three months to three years with a fine

Normally, these penalties are levied in very extreme cases. In most cases, the taxpayer is asked to pay interest @ 1% for late payment of income tax & furnishing of return of income.

So, considering the above consequences, and penalties, you should avoid the late filing of your return of income. This is the reason why you should file your ITR on time.

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