Consequences of Missed ITR Filing

In the realm of income tax filing, the adage “Better late than never” carries weight, but missing the deadline can lead to serious repercussions. As the fiscal year 2022-2023 approaches, individuals who have yet to file income tax returns must act swiftly. The December 31, 2023 deadline represents the final opportunity to fulfil this obligation. This article explores the implications of missing the deadline, the associated penalties, and the avenues available for those who find themselves in this predicament.

Late Filing Fee and Interest Charges:

The original deadline for submitting income tax returns for the fiscal year 2022-2023, also known as the assessment year 2024-2025, lapsed on July 31, 2023. Individuals who missed this deadline now have until December 31 to file their returns. It’s crucial to note that this deadline is universal, encompassing individuals, corporations, audited entities, and those not undergoing audits.

Section 234F of the Income Tax Act outlines the consequences of late filing. Failure to file before the due date incurs a late filing fee. For those missing the deadline, the penalty is ₹5,000, although individuals with total income below ₹5 lakh face a reduced penalty of ₹1,000. Furthermore, late filers are subject to interest charges under section 234A, calculated at 1 percent per month on the unpaid tax amount.

Consequences of Non-Filing:

The ramifications of not filing income tax returns extend beyond monetary penalties. Taxpayers forfeit the ability to carry forward losses from the current assessment year, and non-compliance may result in penalties ranging from 50 percent to 200 percent of the assessed tax, depending on the degree of non-compliance.

Updated Return Option:

Despite missing the December 31 deadline, a provision allows taxpayers to file updated returns within 24 months of the end of the relevant assessment year. Introduced by the Finance Act 2022, this option incurs additional income tax liability but does not impose penalties or fees. It’s important to note that updated returns cannot be used to claim tax refunds, and original deadlines for refund claims must be followed.

Requirements for Filing Updated Returns:

Taxpayers filing updated returns must use the ITR forms specified for the respective assessment year, accompanied by form ITR-U. However, it’s imperative to understand that updated returns cannot be submitted for claiming tax refunds, and the original filing deadline must be followed for such claims.

Possibility of Prosecution:

In severe cases involving substantial discrepancies, there exists the possibility of legal action against delinquent taxpayers. Fulfilling tax filing obligations is crucial to avoid potential legal consequences.

Conclusion

In conclusion, the December 31 deadline for filing income tax returns is a critical milestone, and missing it incurs financial penalties, interest charges, and potential legal consequences. Timely action is imperative, and for those who have missed the deadline, the option of filing updated returns within 24 months provides a pathway to compliance, albeit with additional tax liabilities. Understanding the gravity of the situation and taking prompt action is key to mitigating the repercussions of late income tax return filing.