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What happens if you miss the ITR filing deadline?

  • Akshatha Sajumon
  • 15 Jan
  • 7 minutes

After the closure of a financial year, a very important ritual for every taxpayer is filing their tax returns. By December 31st, 2021 , nearly 5.34 crore taxpayers had filed their returns and out of these, approximately 24.39 lakh returns were filed on a single day. 

The Income Tax Act, 1961 has specified many rules and regulations that have to be adhered to while filing the respective tax returns. It is important that the deadline for filing tax returns is not missed. It will lead to immediate consequences like a penalty as well as long-term impact in case of set-off and carry forward of losses. 

The details of such consequences and other relevant information regarding the filing of the ITR are provided below. 

What are the deadlines for filing ITR for Assessment Year 2021-22?

In order to file the respective ITR in time, it is important for the taxpayers to know the due dates for filing the same. The Income Tax Act specifies different due dates for taxpayers that are required to get their accounts audited others. CBDT has the power and the authority to provide an extension for the due dates to file ITR at their discretion. For the Financial Year 2020-21, the revised due dates are tabled below.

CategoryRevised Due Date
ITR for Taxpayers not requiring audit 31st December 2021
ITR for tax audit15th February 2022
ITR for transfer pricing28th February 2022
ITR for Belated or Revised Returns 31st March 2022

What happens if you do not file ITR on time?

There are multifold consequences if a taxpayer fails to file their income tax returns on time. Some of these consequences are detailed below.  

a. Belated return 

If a taxpayer has missed filing their tax returns on time, they still can file their tax returns in the form of belated returns under section 139(4). This return can be filed any time before the end of the assessment year or before the completion of the assessment, whichever is earlier. Taxpayers are liable to pay interest under section 234A in case of the belated return. However, if the tax liability is nil, they do not need to pay any interest for filing a belated return. 

b. Penalty

The prime consequence of not filing the tax return is the penalty. Taxpayers are liable to pay a penalty under section 234F for not filing their tax return on time under section 139(1). The maximum penalty under this section was Rs. 10,000. However, this section was revised for Financial year 20-21. The maximum penalty under this section now stands at Rs. 5,000. The details of the penalty to be paid for non-filing of tax returns are tabled below.

Gross Total IncomePenalty 
Up to Rs. 2,50,000NIL
Up to Rs. 5,00,000Rs. 1,000
Above Rs. 5,00,000Rs. 5,000

c. Interest

Interest is another crucial factor that has to be considered by the taxpayers when they fail to file their tax returns on time. Taxpayers are liable to pay interest at the rate of 1% per month or part thereof on the tax that is unpaid as per section 234A. 

An important point to note here is that if the tax liability is more than Rs. 1,00,000, taxpayers will be charged interest from the original due date for their respective category (audit or non-audit cases, transfer pricing, etc, as the case may be) and not the revised due date declared by CBDT. If, however, the tax liability is lower than Rs. 1,00,000, no interest will be charged on ITRs filed before 31st December 2021.

d. Delay in receiving refunds

Refunds due to the taxpayers are processed and credited to their respective bank accounts only after the due completion of assessment or returns. In order to not delay this process, it is imperative that the returns are filed at the earliest.  

e. Set-off and carry forward of losses 

The Income Tax Act provides the taxpayers a relief against their losses by giving them a benefit to set them off and carry them forward for a period of 8 consecutive years. However, this benefit is available only if the respective ITRs are filed on time i.e., within their due dates. According to the Act, any loss (except loss under income from house property) needs to be reported as well as filed in accordance with provisions of section 139(1) to be eligible for set-off against future gains and carrying the balance forward for 8 years. 

Conclusion 

Filing income tax returns is an important part of completing the financial year. However, what is equally important is filing them in time before the completion of the respective due dates. The Income Tax Department has time and again revised the due dates for the benefit and convenience of the taxpayers, especially due to the pandemic. It is important to file the tax returns even if there is no taxable income as the benefits of filing the ITR on time are available in the form of long-term benefits like easy loan approvals, better credit reports, etc. 

FAQs

What are the benefits of filing ITR on time?

The benefits of filing ITR on time include the following,
-When a person applies for any loan, lenders review their creditworthiness. Their ITRs are often the first point of reference in such cases. Hence, filing ITRs on time can improve the chances of getting loans sanctioned as well as can provide the benefit of pre-approved loans. 
-ITRs can also be used as KYC for important purposes like applying for a visa or passport or loans.
-Filing of ITRs gives the benefit of set-off and carrying forward of losses. This reduces the ultimate tax liability of the taxpayers against future gains.

When can the taxpayers file for a revised return?

A revised return can be filed by any taxpayer if the original ITR has any error or mistake or misreporting of income. Taxpayers can file the revised return at any time before the end of the relevant assessment year. In the case of FY 20-21, the last day to file the revised return is 31st March 2022.

 What is the maximum penalty for delay in filing ITR for AY 21-22?

The maximum penalty for delay in filing ITR is restricted to Rs. 5,000

Is it mandatory to e-verify the returns for completion of the filing of ITR?

Yes. E-verifying the ITR is a mandatory step in the filing of the ITR failing which the process is said to be incomplete. The Income Tax Department cannot process the returns till they are successfully e-verified. Hence, even if a taxpayer has filed their ITR before the due date but has missed e-verifying them before completion of 120 days from filing them, the return is not said to be filed on time as per section 139(1).

What is the interest to be charged under section 234A?

Under section 234A, taxpayers are liable to pay interest at the rate of 1% per month or the part thereof on unpaid tax amount in case they have missed filing their ITR on time (before the completion of the respective due dates).

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Akshatha Sajumon

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