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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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Every year, you have to file your Income Tax Return with the Income Tax Department of India if your income is over the basic exemption limit or if you have made certain specified transactions. If you are required to file your Income Tax Return and have missed the deadline, there are various consequences under the Income-tax Act, 1961.
What is the due date for filing your tax returns, anyway?
For individual taxpayers, the due date for filing Income Tax Returns is generally July 31 of the relevant assessment year. For instance, if you are filing your tax returns for the financial year 2022-23, the due date for the same will be July 31, 2023.
In case you are required to conduct a tax audit for your business or profession, then the due date is October 31 of the relevant assessment year.
In case you (including partners of the firm or the spouse of such partner (subject to certain conditions)), are required to furnish a report in case of entering international transaction or specified domestic transaction, then the due date is November 30 of the relevant assessment year.
What happens if you miss the deadline for filing your tax returns?
If you miss the due date for filing your Income Tax Returns, the following remedies are available to you –
(1) You can still file a belated return for the relevant previous year. The deadline for filing a belated return is December 31 of the assessment year concerned.
For example, let’s say you did not file your Income Tax Returns for the financial year 2022-23. The due date for filing the original ITR is July 31, 2023. However, if you fail to file it before July 31, 2023, you can file a belated tax return by December 31, 2023.
(2) In case you miss the deadline for a belated return and have a tax liability, then you can file an updated return. The updated return can be filed within a period of 24 months from the end of the assessment year after making payment of tax, interest including additional tax (25%/50%), subject to fulfilment of other certain conditions.
For example, let’s say you did not file your original or belated Income Tax Return for the financial year 2022-23. The due date for filing the original ITR is July 31, 2023. Then, you can file an updated tax return by March 31, 2026.
What is the consequence of delayed filing of Income Tax Returns?
With effect from the financial year 2017-18, the Indian government introduced a penalty in the form of late filing fees for anyone who fails to file their Income Tax Returns before the due date. The maximum fee that can be levied for filing a belated return after July 31 but before December 31 of the relevant assessment year is ₹5,000. However, in the case of small taxpayers whose total income is ₹5 lakh or lower, the maximum fee that can be levied for late filing of Income Tax Returns is capped at ₹1,000.
To put things in perspective, here is a preview of how the late filing fee is based on the total income and the date of ITR filing.
Date of filing the Income Tax Return for AY 2023-24 ( where the due date is July 31, 2023)
Penalty if your total income is ₹5 lakh or lower
Penalty if your total income exceeds ₹5 lakh
On or before July 31, 2023
Nil
Nil
From August 1, 2023, to December 31, 2023
₹1,000
₹5,000
What about interest under section 234A?
If you have not filed your Income Tax Return before the due date and you have unpaid tax liabilities, you will also have to pay interest under section 234A. This interest is levied on the amount of unpaid tax at the rate of 1% per month or part of the month during which there is a delay.
For instance, let’s say you have an unpaid tax liability of ₹10,000, and you file your Income Tax return for AY 2023-24 on October 10, 2023. Here, there has been a delay of around 3 months (August, September, and part of October). So, the interest under section 234A will be calculated as follows.
Interest under section 234A:
= ₹10,000 * 1% * 3 months
= ₹10,000 *3%
= ₹300
This means you will have to make a payment of ₹10,300 before you file your Income Tax Return.
Can you be imprisoned for late filing or non-filing of your Income Tax Returns?
In most cases, taxpayers typically just need to pay the late filing fee before submitting their Income Tax Return online. However, in some cases, if the person wilfully does not file the Income Tax return or does not file the Income Tax return even after receiving notices from the Income Tax department, they may face imprisonment along with a fine for late filing of the Income Tax Return. The period of imprisonment can range from 3 months to 2 years. If the taxpayer has an unpaid tax liability exceeding INR 25 lacs, the period of imprisonment may go up to 7 years too.
Denial of benefit to carry forward losses
The taxpayers who may have incurred losses in business or on sale of securities shall be denied the benefit of carrying forward such losses to future years and setting it off against such future income, thereby paying more taxes in the future.
Conclusion
The bottom line is that you need to file your tax returns on time in order to avoid the fees/interest/penalty for belated ITR filing. Filing your ITR before the due date allows you to clear your tax liabilities on time. If you have any tax dues, you can use the Kotak payment gateway or even the Kotak internet banking portal (in case you are a Kotak customer), from the e-filing portal, to pay your taxes swiftly and without any hassle.
This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers, and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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