ITR Filing AY 2024-25: Consequences on Failing to File Income Tax Return
ITR Filing AY 2024-25: It is always important that you file your return before the set deadline i.e. July 31st. If you don’t file a return on time and fail to file it, you can face various consequences like penal interest or interest charged on the unpaid amount, late fines or penalties. The worst part is that you can sent to rigorous imprisonment of six months which could extend upto 7 years in case of tax evasion found when you fail to submit your ITR.
All the people with some level of literacy either never or rarely remember to file their ITRs on time or even if they do, they usually delay it as a result of negligence or sheer indolence.
Some people make the mistake of thinking that simply because their company issued Form 16 and withheld TDS from their monthly salary, it means that they are exempt from further tax obligations. People think that filing taxes and paying TDS are the same thing. Nevertheless, that is untrue.
Individuals with low income have often thought that don’t need to file income tax returns. However, there are some conditions other than earnings that mandate the filing of an ITR. Consequences will occur if you do not file the ITR by the stipulated deadline. To comprehend these prerequisites and stay out of trouble, read on.
When must the ITR be filed?
According to income tax laws, it is mandatory to file an ITR for an individual or a firm whose income is above the set threshold limit before exemptions and deductions. For the above financial year 2023-24, the exemption limit for individuals below 60 years of age is Rs.2.5 Lakh. For those who are under 60 to 80 years of age, the limit is Rs.3 Lakh and for those above 80 years, Rs.5 Lakh is the limit.
There are other conditions in which a return must be filed. For example, if an individual deposited an amount of Rs.1 crore in one or more current bank accounts, spent travel costs on foreign land for himself or another person has been more than Rs.2 Lakh or spent more than Rs.1 Lakh on electricity expenses. In these above cases, you need to file an ITR.
Filing an ITR becomes mandatory for business owners if their turnover, total sales or gross receipts exceed Rs.60 Lakh. Similarly, professionals must file an ITR, if their gross revenue from their particular profession exceeds Rs.10 lakh. It is also required if the total amount of taxes deducted and collected is Rs.25,000 or more (Rs.50,000 for those 60 years or older), or if the total amount of money deposited in savings accounts exceeds Rs.50 Lakh.
Payments of advance taxes if any, must be reported in the ITR to complete the income and taxes self-assessment. Filing a return allows the Income Tax Department and the taxpayer to reconcile their records. Moreover, if you wish to carry forward a financial loss to offset future income, you have to file your return before the due date.
What happens when your return is not filed?
ITR is a document that needs to be filed before or by the end of the assessment year and for the financial year ending 31st March, the deadline for filing it is 31st July. The AY (assessment year) for the FY (financial year) 2023-24 is 2024-25, so therefore the ITR of the FY 23-24 should be filed by 31st July 2024.
There are various consequences for not filing an ITR (Income Tax Return), including penal interest, late fees, penalty and imprisonment in some cases, when you are bound to file a return.
Even, if you fail to file a return by 31st July, you have an option to file the belated return by 31st December 2024 but with late fees.
If you submit the return past the due date but still within the period allowed for late filing of the return, a penalty and interest on the amount will be charged to your account.
As per Section 234A of the Income-tax Act, a taxpayer is liable to pay simple interest at the rate of 1% for every month or part of a month starting from the date immediately after the due date till when the final return is submitted.
Additionally, “if the return is furnished after the due date specified under Section 139(1), a taxpayer would be additionally liable to pay late fees of Rs.5,000 under Section 234F. ”
However, such a late filing cost shall be limited to Rs.1,000 if the person’s total income does not exceed Rs.5 lakh.
Calculate Your 2024-2025 Income Tax
You could face severe penalties, like huge fines and possibly imprisonment if you even failed to file a belated return.
Willful failure to furnish the return within the deadline contains prosecution under Section 276CC of the Income-tax Act.
Willful failure or default in filing an ITR may result in prosecution and fines. If the amount of tax evaded on failing to file an ITR is more than Rs.3,000, the imprisonment can be extended from 3 months to two years.
If individuals fail to file an ITR and commit tax evasion worth more than Rs.25,00,000 they may face rigorous imprisonment for a minimum of six months, with the possibility of an extension to seven years along with a fine.
It is therefore always preferable to file your return before the deadline. If you’re having trouble fulfilling your obligation and avoiding the above-mentioned consequences, consider seeking assistance from a tax professional or chartered accountant.
