What are the Penalties for Late Filing of ITR? (2024)

What is the due date to file ITR for FY 2023-24?

The following are the deadlines for filing income tax returns (ITRs) for the financial year 2023-24, depending on the type of taxpayer and the nature of their income:

• Individuals and entities who are not subject to tax audits under the Income Tax Act of 1961 have to file their ITRs by the 31st of July.
• Taxpayers who are required to get their accounts audited under the Income Tax Act of 1961, except for those involved in transfer pricing cases, have to file their ITRs by the 31st of October.
• Taxpayers who are involved in transfer pricing cases and have to furnish a report under section 92E of the Income Tax Act, 1961, have to file their ITRs by the 30th of November.
• The last date for filing revised or belated ITRs for the financial year 2023-24 is the 31st of December.

Penalty for late filing of income tax return for individual

Here is a summary of the penalties applicable for late filing or non-filing of ITR under various sections -

• Penalty for Late Filing u/s 234F - Starting from FY 2017-18, you will have to pay a late filing fee under Section 234F of Income Tax Act if you file your returns past the deadline.
  For example, the deadline for filing returns for FY 2023-24 is 31st July 2024. You can still file the belated return by 31st December 2024 if you miss the deadline, but you will have to pay a fine for late filing.
  The fine will be Rs 5,000 if you file your ITR between 31st July 2024 and 31st December 2024. However, small taxpayers get some relief – if their total income is less than Rs 5 lakh, the fine for late filing will be only Rs 1,000.
  Note: This applies to belated returns filed after the due date but on or before December 31st of the assessment year. Starting from the financial year 2021, the income tax department has reduced the maximum penalty for late filing of returns from Rs. 10,000 to Rs. 5,000.
• Section 234A - Under Section 234A, penalties are calculated as interest charges. A simple interest of 1% per month or part of a month is levied on the tax amount outstanding. This section applies if the taxpayer:
  • Does not pay taxes on time,
  • Fails to submit Form-16 after changing jobs, or
  • It does not comply with other direct taxation laws and regulations.
• Section 234B - Under Section 234B, if a taxpayer delays paying advance tax or pays less than 90% of the assessed tax, they must pay the due amount along with interest. The interest calculation period starts from the end of the relevant financial year (usually March 31st) until the date the tax liability is paid in full. Specifically, penalty interest will be added if:
  • The payment of advance tax is delayed or
  • The advance tax is paid, but not in full.
• Section 234C - This section applies when the taxpayer has not paid the interest on the delayed payment of advance tax, as required by Section 234B.
  Note: Section 234C specifically targets late payment of advance tax installments. For all categories of penalties for delayed IT returns, a minimum interest rate of 1% applies.
• Section 271H - This section applies to failure to file TDS/TCS returns by the due date. The penalty for these offenses can be a sum which is not less than ten thousand rupees but which may extend to one lakh rupees, in addition to a late filing penalty under Section 234E, which is ₹200 per day until the TDS/TCS is filed.
• Section 270A - This section is applicable in cases like non-filing of ITR or underreporting of income. 50% of the total tax payable on the under-reported income.

What are the Consequences of Late Filing of ITR?

Disallowance of expenses: If you claim certain expenses in your ITR, such as business expenses or medical expenses, these expenses may be disallowed if you do not file your ITR on time.

Criminal prosecution: In extreme cases, the Income Tax Department may even initiate criminal prosecution against you for willful evasion of taxes. This could lead to imprisonment and other penalties.

Set-off losses are not allowed: You can only carry forward losses to subsequent years if you file your return within the due date. This does not apply to house property losses, which you can carry forward regardless. You also need to file your return on time if you want to offset your losses with future gains, except for house property losses.

Delayed Refund: Filing your ITR after the due date also delays the refund, if any.

Interest: If you have any tax liability, you will be charged interest on the outstanding amount from the due date of filing the ITR. The interest rate is currently 1% per month.

Unable to opt for New Tax Regime: Salaried employees will be unable to choose the new tax regime while filing belated ITRs.

What are the Benefits of Timely Filing of ITR?

Below are the benefits of filing your ITR on time -

Easy loan approval: Banks and other financial institutions often require a copy of your ITR as proof of your income and financial standing. Filing your ITR on time will show that you are a responsible taxpayer and that you have a stable income, which can make it easier to get your loan approved.

Tax refund: If you have overpaid your taxes, a refund can be claimed by filing your ITR on time. The sooner you file your return, the earliest you will receive your refund.

Quick visa processing: Some countries require you to submit a copy of your ITR while applying for a visa. Filing your ITR on time will help to ensure that your visa application is processed more quickly.

Carry forward of losses: If you have losses from your business or profession, you can carry them forward to future years only when ITR is filed on or before the due date and set them off against your income in those years. This can help to reduce your tax liability in the future.

Late ITR Penalty for Individuals Having Income Below the Basic Exemption Limit

Generally, only those who have an income exceeding the basic exemption limit are required to file an ITR. However, there are certain cases in which individuals have to file an ITR even if their annual income is less than the basic exemption limit. Non-filing of ITR in such cases can also attract penalties under various sections.

Here are the conditions -

• Electricity expenditure exceeding Rs.1 lakh.
• More than Rs.2 lakh is spent on foreign travel by self or a family member.
• Deposit of more than Rs.1 crore in one or more current accounts with a bank.
• Indian residents earn income from foreign assets.

Steps to Place Condonation of Delay Request to File Previous Year Return

Condonation of delay in filing ITR is a special relief provided by the Income Tax Department to the taxpayers for late filing or verification of ITR. To avail of this benefit, the assessees must file a request for condonation of the delay in filing ITR over the e-filing portal. Then, if the income tax officers deem fit, they can accept the request and give the taxpayer a second chance to file the ITR.

Step 1: Application Submission

• Submit an application to your jurisdictional officer requesting condonation of delay.
• Ensure to provide a valid reason for the delay in your application.

Step 2: Responding to Notice

• After submission, the Income Tax Department will issue a notice seeking relevant information regarding your claim.
• Access this notice on the Income Tax portal under the ‘E-file’ tab or the ‘Pending Actions’ section on the dashboard.
• You can submit a reply to the notice online, either by yourself or through an authorized representative (CA or advocate).

Step 3: Filing ITR

• Upon approval of your condonation application, you can proceed with filing your Income Tax Return (ITR) on the Income Tax portal.
• Complete the filing process as per the guidelines.

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