Every Indian citizen is required to file income tax returns annually for the income earned in the financial year. Timely payment of your income tax is your duty as a citizen. It also protects you from ITR late filing penalty and other consequences. 


The government provides a period of four months for taxpayers to file their ITR every assessment year, from April to July. Notifications regarding the commencement of income tax return filing are released to save you from ITR late fee. 


However, if you have missed the income tax return dates, the government still allows you to file your returns. Read on for more about the tax penalty for late filing of your annual ITR.

Implications Associated with Late Filing of Income Tax Returns

1. You Will Get Penalised

In the event that you don’t pay the income tax applicable before the due date, you will be charged a penalty. The amount of this penalty depends on your annual income. If your annual income is above ₹5 lakhs, and you file your ITR before 31 December, then you are required to pay the income tax late filing fees of ₹5,000. 


The ITR penalty changes if you pay to file your income tax after 31 December. In this case, the late fee for ITR can go up to ₹10,000.

2. You May Face Prosecution

When an individual fails to pay their income tax, they receive notices from the income tax department. This is to make sure that the individual is aware that the due date for filing the income tax has passed. Continued noncompliance, even after multiple notices, will warrant legal action. 


Here, the income tax department takes action, which may include imprisonment for 3 months, and this can go up to 2 years. The punishment is based on the individual's income tax amount. If the unpaid income tax is a high sum, the individual may receive an imprisonment term going up to 7 years.

3. You Pay Interest on Late Payments

The penalty for non-payment of your income tax is one part of the consequence. The other part is that you have to pay interest on your late payments. This is similar to the penal interest payable on loans when a borrower defaults. 


Under Section 234A, the interest charged on non-payment of your taxes is set at 1% monthly. This interest starts getting accumulated after the due date gets passed and tax payable has not been paid. 


Depending on the tax payable, the addition of a monthly interest penalty can exert a great deal of financial pressure on your savings. This is why it is crucial that you file your income tax returns on time. 

4. Your Losses Cannot be Offset

If your income tax return is not filed successfully before the due date provided by the IT department, you will be not allowed to carry forward your losses. There is an exception, wherein this allowed if it is a loss associated with a house property. 


Here, any losses incurred under income gained from house property may be carried forward. However, any other losses incurred do not fall under this exception, and your tax liability for the financial year only increases. 

5. Your Refunds May Get Delayed

There are instances where you may pay more than you are required to as tax. This may be due to certain exemptions or deductions. In such cases, you can get a refund for this excess amount. 


As explained earlier, paying your income tax is the initial step. Only after that, you can file for income tax returns. Therefore, late payment of your tax translates to a delay in your tax refund. Moreover, the penalties for late payments could negate any tax savings you would have made. 


Paying your taxes on time is key to avoiding such consequences, many of which can cause severe financial issues. Moreover, paying your tax on time has a few benefits. These benefits include protection against penalty for late filing of ITR, faster processing of visa applications, easy approval of your loans and much more.


The process of filing your income tax returns for the year is a simple and straightforward process, and it takes just a few minutes. With the development and improvement in the ITR system over time, filing your ITR is now easy and time-efficient.

FAQs on Late Filing of Income Tax Returns

What penalties and late fees do I need to pay if I file my ITR late?

The penalty for late filing of income tax return for individuals with annual income above ₹5 lakhs is ₹5,000 can go up to ₹1,000, based on the date.

Is it possible to file ITR after the due ITR filing dates?

Yes, it is possible to file ITR after the due date. You can file a belated ITR return with a belated ITR form up to 3 months after this date. Remember to check if any ITR penalty is applicable to your belated ITR.

What is the interest rate charged for late ITR filing?

Late filing of ITR attracts a 1% interest rate as a late penalty, and it is levied monthly.

How can the late fees for income tax return be avoided?

Late fees for income tax returns can be avoided by filing the income tax before the due date. The income tax department releases this due date, and the window is open for 4 months, from April to July.

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