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Last updated: April 15th, 2024 2:58 PM

Penalty for Late Filing of ITR

Taxpayers are required to file their Income Tax Return (ITR) for the income earned up to the 31st of July of the Assessment Year (AY) relevant to the previous Financial Year (FY) unless this deadline is officially extended. The government provides a four-month window, starting on April 1st and ending on July 31st of each Assessment Year, to allow taxpayers ample time to consolidate their income details and file their returns. Filing your ITR can take just a few minutes, making this timeframe more than reasonable. Timely payment and filing of taxes are crucial. Failure to file returns by the due date can result in penalties. In this article, we will explore the Penalty for late filing of ITR, emphasizing the importance of meeting tax obligations on time. IndiaFilings' tax experts are here to guide you through the ITR filing process, ensuring compliance and timely submission. [shortcode_37]

Income Tax Return

An Income Tax Return (ITR) is a form taxpayers use to report their income, expenses, and other pertinent tax information to the tax authorities. It is a means of declaring the total income earned during a financial year, calculating tax liability, and scheduling tax payments. Filing an ITR is mandatory for individuals and entities that meet certain financial thresholds, and it also serves as a crucial document for many financial procedures, such as loan applications and visa processes. The form varies depending on the income source, the amount earned, and the applicable deductions the taxpayer claims. Click here to learn more about ITR Filing in India

Deadline for Filings ITR for AY 2024-25

For the Assessment Year (AY) 2024-25, the deadline for filing Income Tax Returns (ITR) as per section 139(1) is set for 31st July 2024 unless the government grants an extension. It's a common misconception among many taxpayers that paying their taxes absolves them of all further duties. However, failing to meet the ITR filing deadline can lead to legal consequences, including a late filing fee that was introduced starting from the financial year 2017-18. Here is a concise summary of the key due dates for various categories of taxpayers for FY 2023-24:

S. No.	Particulars	Due Date
1	ITR filing for individuals and entities not liable for tax audit	31st July 2024
2	ITR filing for taxpayers covered under tax audit (excluding transfer pricing cases)	31st October 2024
3	ITR filing for taxpayers covered under transfer pricing	30th November 2024
4	Due date for revised return/belated return of income for FY 2023-24	31st December 2024

The last date to file an Income Tax Return (ITR) for FY 2023-24 (AY 2024-25) without a late fee is 31st July 2024.

Penalty for Late Filing Income Tax Return - Section 234F and Other Relevant Sections

In the 2018 Budget announcement, a new section, 234F has been announced by the Government. Section 234F will be applicable for returns filed for the financial year 2017 – 18 onwards.

Section 234F – Penalty for late-filing of Returns

Section 234F was introduced in the year 2018, which provided details on the penalty amount for delayed or late filing of Income Tax Returns. This penalty would be added to the existing interest charges (under section 234A) for delayed or late filing of IT returns. There are other sections available apart from Section 234, which are explained below:

Section 234A – Interest on Delayed Filing of Returns

As per Section 234A, the penalty will be calculated as interest charges. This section is applicable if the taxpayer:

has not paid tax on time
has not submitted Form-16 after shifting from one company to another, or
fails to comply with any other Direct Taxation laws and regulations provisions.

Section 234B – Interest on delayed payment of Advance Tax

As per Section 234B, if the taxpayer delays the payment of advance tax, the taxpayer has to pay along with the interest if the advance tax amount is less than 90% of the assessed tax. In precise, the amount of penalty interest will be added in the following conditions:

The payment of advance tax is delayed
The advance tax is paid but not in entirety

Section 234C – Interest on deferred payment of Advance Tax

This section is applicable when the taxpayer has not paid the interest to the delayed payment of advance tax (as per Section 234B). Note: For all these categories under penalty of delayed IT returns, there will be minimum of 1% of interest rate are applicable. The following table summarizes the penalties applicable for various offences related to late or incorrect filing of Income Tax Returns:

Section	Nature of Offence	Penalty Levied
234F	Filing ITR past the due date	₹5,000 if ITR is filed before 31st December of the Assessment Year; ₹10,000 if filed after 31st December but before 31st March of the Assessment Year, for incomes above ₹5 lakh. For incomes below ₹5 lakh, the penalty is ₹1,000.
234A	Failure to file ITR by the due date with unpaid tax due	Interest at 1% per month or part of a month on the unpaid tax amount, starting from the due date until payment is made.
271H	Failure to file TDS/TCS returns by the due date	Penalty ranging from ₹10,000 to ₹1,00,000, in addition to a late filing penalty under Section 234E, which is ₹200 per day until the TDS/TCS is filed.
270A	Failure to file ITR or under-reporting of income	50% of the total tax payable on the under-reported income.

Taxpayer-Specific Penalties for Late or Non-Filing of ITR

The penalties for not filing income tax returns by the due date vary based on the category of taxpayer and their income levels. Here's a breakdown of the penalties applicable to different groups:

Category of Taxpayer	Income Level	Penalty for Late Filing
Salaried Individuals	Below ₹2.5 lakhs	No penalty (if no tax liability)
	Below ₹5 lakhs	Maximum penalty cannot exceed ₹1,000
	Above ₹5 lakhs	Up to ₹10,000
Companies	Any income level	Up to ₹10,000
Self-Employed Individuals	Any income level	Up to ₹10,000
Senior Citizens	60-80 years, income above ₹3 lakhs	Up to ₹10,000
	Above 80 years, income above ₹5 lakhs	Up to ₹10,000

ITR Late Filing Fees Under Section 234F for FY 2023-24

Starting from the financial year 2017-18, late filing fees are imposed for submitting your Income Tax Returns (ITR) past the due date, as mandated by Section 234F. For example, the due date for the FY 2023-24 is set for 31st July 2024. If you fail to file the ITR by this date, you can still file a belated return by 31st December 2024, but with a penalty.

A maximum penalty of ₹5,000 will be assessed if you file your ITR after 31st July 2024 but before 31st December 2024.
However, there is leniency for small taxpayers: If their total income does not exceed ₹5 lakh, the maximum penalty for late filing is reduced to ₹1,000. Additionally, no penalty will be applied if the total income does not surpass the basic exemption limit.

Summary of Late Filing Fee Details under Section 234F for FY 2023-24:

Return Filing Period	Total Income Below ₹5 Lakh	Total Income Above ₹5 Lakh
Up to the due date (31st July 2024)	₹0	₹0
Between 1st August 2024 and 31st December 2024	₹1,000	₹5,000

Consequences of Not Filing by the Due Date

Failing to file your Income Tax Return (ITR) by the due date can lead to several significant consequences:

Prosecution

If a taxpayer willfully neglects to file an income tax return despite receiving notices, the income tax officer is authorized to initiate prosecution proceedings.

Initiation of Prosecution: As mentioned, The income tax officer may start prosecution proceedings if a person willfully fails to file a return after receiving notices.
Imprisonment: The penalty for non-compliance can include imprisonment for three months to two years and a fine.
Extended Imprisonment for Larger Tax Debts: If the unpaid tax amount is significant, the imprisonment term may be extended up to seven years.

Penalties for Late Filing of Income Tax Returns

Penalty for Underreporting Income: If income is underreported, the income tax officer can impose a penalty of up to 50% of the tax due.
Additional Consequences: In addition to the penalties imposed by the IT department, late filing of returns can lead to several other adverse outcomes for the taxpayer.

Consequences of Late Filing: Inability to Set Off Losses

Restriction on Carrying Forward Losses: Losses incurred in categories other than house property cannot be carried forward to offset future gains if the income tax return is not filed by the due date.
Exception for House Property Losses: Losses from house property are an exception; these can still be carried forward even if the return is filed after the due date.

Interest Charges for Delayed Filing of Income Tax Returns

Interest Rate: Interest is charged under Section 234A at a rate of 1% per month or part of a month on the tax due, applicable until the tax is fully paid.
Interest Calculation Start Date: For the FY 2023-24, interest begins to accrue the day after the filing due date, i.e., starting from 1st August 2024.
Accumulating Costs: The longer the filing delay, the more interest accumulates, increasing the total tax liability.
Delayed Refund Payments: If you are entitled to a tax refund due to overpayment of taxes, filing your returns after the due date can lead to delayed refund processing.

To ensure you receive your tax refund promptly, filing your returns before the due date is advisable.

Late ITR Penalty for Individuals Below the Taxable Limit

Typically, individuals and organizations with total gross income below the exemption limit are not subject to penalties for non-filing of Income Tax Returns (ITR). However, amendments introduced in the Income Tax Act via the Union Budget 2019, effective from Assessment Year (AY) 2020-21, mandate ITR filing for taxpayers meeting specific conditions despite having no taxable income. These conditions include:

Expenditure exceeding Rs. 1 lakh on electricity consumption
Expenses exceeding Rs. 2 lakhs on foreign travel
Total deposit of over Rs. 1 crore in one or multiple current accounts with a bank
Indian residents earning income from foreign assets

If you meet any of these conditions outlined in the latest amendment, you are liable to pay the prescribed penalty for not filing the ITR, even if your gross income is not taxable. Now that you understand the circumstances requiring ITR filing knowing the process for paying the penalty if you fail to file your returns within the prescribed due date is crucial.

Revised Guidelines for Correcting Errors in Income Tax Returns

If you make a mistake while filing your Income Tax Return (ITR), the updated regulations now provide a shorter correction period. For ITRs filed from the financial year 2017-18 onwards, you have until December 31st of the assessment year to amend any errors. This is a significant change from the previous rule, allowing taxpayers to revise their returns for two years. The current revision window has been reduced to just nine months from the end of the financial year. Thus, filing your return early extends the available time to make necessary adjustments, ensuring that your tax records are accurate.

Options for Addressing Unfiled ITRs for Previous Financial Years

If you have not filed your Income Tax Return (ITR) for previous financial years, you have two options to rectify this:

Condonation Request under Section 119(2)(b): You can apply for condonation of delay in filing ITR.
Filing an Updated Return under Section 139(8A): If certain conditions are met, you can file an updated return, which allows taxpayers to amend previously filed returns.

Procedure to Place Condonation of Delay Request

Steps to Submit a Condonation of Delay Request for Filing Previous Year's ITR:

Step 1: Prepare and Submit Application

Begin by preparing an application detailing the reasons for the delay and submit it to your jurisdictional income tax officer for condonation consideration.

Step 2: Respond to Notices

After submitting your application, the tax department will issue a notice requesting further information about your claim. This notice can be accessed via the 'E-file' tab or the 'Pending actions' section of the income tax portal dashboard. You can submit your response to this notice online, either personally or through an authorized representative such as a Chartered Accountant or an advocate.

Step 3: File the Return Upon Approval

Once your condonation application is approved, you can file your ITR on the income tax portal. Complete the filing process as usual. Information about Section 119 relating to the condonation of delay is available for further reference on the portal.

Filing an Updated Return Under Section 139(8A)

Section 139(8A) of the Income Tax Act allows taxpayers to update their Income Tax Return (ITR) within two years from the end of the year in which the original return was filed. Through the ITR-U form, this provision aims to enhance tax compliance and encourage voluntary corrections without initiating legal action. Key Points About Filing ITR-U:

Eligibility for Filing: ITR-U can only be filed if it results in an additional tax liability. If the update leads to a tax refund or no change in tax liability, filing under Section 139(8A) is not permitted.
Penalties for Late Filing: When filing ITR-U, penalties are applicable based on the timing of the submission relative to the assessment year (AY):
Within 12 months from the end of the relevant AY: The penalty is 25% of the additional tax due, plus interest and any applicable late filing fees.

Within 24 months of the end of the relevant AY, the penalty increases to 50% of the additional tax due, along with interest and late filing fees. This provision is specifically designed to allow taxpayers to rectify mistakes in previously filed returns, thus helping to ensure accuracy and completeness in tax reporting.

Conclusion

In conclusion, timely filing of Income Tax Returns (ITR) is imperative for taxpayers to fulfil their financial obligations and avoid legal penalties. The government provides a window from April 1st to July 31st of each Assessment Year for taxpayers to consolidate their income details and file their returns. Failure to file an ITR by the due date can result in various penalties and consequences, including prosecution, penalties for underreporting income, and interest charges on unpaid taxes. The penalties vary based on the nature of the offence, the taxpayer's income level, and the type of taxpayer. Get expert guidance from IndiaFilings for timely ITR Filing and avoid penalties. [shortcode_37]

Latest Update on the Pay Later Option for Income Tax Filing

The Income Tax e-filing portal has recently rolled out a ‘Pay Later’ option, allowing you to complete your tax filing process before making any tax payments. You can pay taxes after you are done filing. For additional information, please refer to our guide – Pay later option for the Income tax return filing.