Penalty for Late Filing:
Filed after the due date but before December 31: A penalty of ₹5,000 will be levied on top of your regular tax liability.
Filed after December 31 but before March 31: The penalty increases to ₹10,000.
If your total income is less than ₹5 lakh: The penalty is capped at ₹1,000, regardless of the filing date.
In addition to the penalty, you will still be responsible for your tax liability and may face further complications, such as difficulties in obtaining loans or delays in tax refunds.
Filing your ITR on time helps avoid these penalties and ensures you stay compliant with tax laws.
Revised Income Tax Return
If you make an error while filing your Income Tax Return (ITR), you can file a revised return to correct those mistakes. Previously, taxpayers had up to two years to file a revised return; however, the government has now shortened this period to just one year from the end of the relevant assessment year. Therefore, the sooner you file your return, the more time you’ll have to revise it if necessary.
Time Frame for Revising Your ITR
There is a limited time window for revising your ITR. If you discover an error or omission after filing, you must act quickly. Missing the revision deadline can lead to penalties, and it becomes more difficult to rectify mistakes. It’s important to review your return carefully as soon as possible after filing to ensure accuracy and avoid complications.
Interest Payment
Timely payment of taxes is essential to avoid interest charges. If you fail to pay the assessed tax by the due date, you will incur interest on the outstanding amount. The interest will accrue from the original due date until you make the payment. To avoid additional financial burden, make sure to pay your taxes on time and be aware of the interest rates applicable.
Carry Forward of Losses
If you fail to file your ITR on time, you lose the opportunity to carry forward certain losses such as business losses or capital losses. These losses can typically be used to offset future income, but they can only be carried forward if your ITR is filed within the prescribed timeline.
Bar on Carrying Forward Losses
Failing to file your ITR on time means you cannot carry forward losses like “profits and gains of business or profession” or “capital gains.” However, you can still offset unabsorbed depreciation under the category of “income from house property.”
Other Consequences of Delayed Filing
In addition to the penalties and loss of carry-forward benefits, there are other indirect consequences for late filing:
Loan Approval Issues: Banks often require tax returns from the past three years when you apply for a loan. Failing to file your returns on time may result in difficulties securing credit or funding.
Increased Scrutiny: The Income Tax Department is likely to scrutinize late returns more rigorously than timely filed ones. Taxpayers who file returns after the due date may be subject to a more thorough examination, which could last up to five years.
Supporting Document Challenges: If your return is scrutinized after a long delay, you may find it difficult to provide the necessary supporting documents to prove your claims.
As you can see, filing your ITR on time is crucial to avoid penalties and additional complications. If you’re unsure about how to file your return or need help, feel free to contact our expert team at auriga accounting. We can guide you through the process and ensure that your returns are filed on time to prevent unnecessary legal issues. We also offer timely reminders so you can meet your tax filing deadlines without any stress.
