Last updated: March 27th, 2024 10:58 AM

What happens if a company does not file ITR?

Company Income Tax Return Filing is essential for maintaining compliance, record keeping, availing tax benefits, and maintaining a good reputation for the company. If a company fails to file its Income Tax, it may face many consequences. This article will examine the various penalties, dates, and consequences of not filing g an ITR by the company. Read the article you will find the answer to "What happens if a company does not file an ITR"?

When must a company tax return be filed?

A company in India is required to file its Income Tax Return (ITR) by the following date:

Category of Taxpayer	Due Date for Tax Filing
Individual / HUF/ AOP/ BOI (books of accounts not required to be audited)	July 31
Businesses (Requiring Audit)	October 31
Businesses (Requiring TP Report)	November 30

For more details on the due date, refer to our article

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.

Importance of filing ITR

Filing Income Tax Returns (ITR) is essential for several reasons:

• Compliance: Filing ITR is a legal obligation and a requirement under the Indian Income Tax laws. Failure to file ITR can result in penalties, interest, and prosecution.
• Record Keeping: Filing ITR helps maintain a record of a company's income and taxes paid, which can be helpful for future reference and for availing tax benefits.
• Claim Refunds: If a company has paid more taxes than required, it can claim a refund by filing its ITR.
• Loan and Visa Applications: Filing ITR is often a requirement when applying for loans, visas, or opening a bank account. It demonstrates the company's financial stability and income.
• Maintaining Good Standing: Filing ITR on time helps maintain a good reputation and demonstrates the company's commitment to compliance and transparency.

Hence Filing ITR is essential for maintaining compliance, availing tax benefits, and maintaining a good reputation for the company.

What happens if a company does not file ITR?

If a company fails to file its Income Tax Return (ITR), it may face the following consequences:

• Penalty: The company may be levied with a penalty for non-filing of ITR; as per section 234F of the IT Act, a fine of Rs.10,000 will be charged for failing to file tax returns,
• Interest: In addition to the penalty, the company may also be charged with interest on the outstanding tax amount. Moreover, a delay in ITR filing can result in interest being charged under Section 234A of the Income Tax Act 1961
• Prosecution: In severe cases, the company may be prosecuted for non-compliance, leading to the imprisonment of up to 7 years and/or fines.
• Disqualification of Directors: The company's directors may be disqualified from being appointed directors of any company for up to 5 years.
• Loss of Eligibility for Government Contracts: The company may be disqualified from bidding for government contracts or availing government facilities if it has not filed its ITR.

Therefore, companies must file their ITRs on time to avoid these consequences and maintain compliance with the Income Tax laws in India.

Procedure to check whether ITR has been filed or not

Following the below-mentioned procedure to check whether you have filed the ITR for previous years:

• Step 1: Visit the official ITR website.
• Step 2: Select the 'ITR-V Receipt Status.'
• Step 3: Furnish the PAN and the Assessment Year details.
• Step 4: Provide the Captcha code, and then submit.
• Step 5: If you have filed ITR for that year, you can see a message that ITR-V Received. Nevertheless, a message will be displayed if you have not filed.

What if we missed the date?

As mentioned above, if ITR is not filed within the due date, taxpayers can still file the ITR later after clearing the requisite fines. This filing is called a belated return. A fee of Rs.5000 is charged in such cases. There will be a fine of Rs.10,000 if you pay after December 31.