Income Tax Return filing: Implications for delay, non-filing of ITR for individual taxpayers

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Updated: July 30, 2018 12:17 PM

It is important to be aware of the consequences under the Income-Tax Act, 1961, for delay or failure to file the income tax return on time.

income tax return filing, income tax efiling, ITR filing, Implications for delay, non-filing of ITR, taxpayers, section 234F, section 234A, section 270AThe Income Tax Act has wide-ranging implications for default in complying with tax return filing obligations.

The government has only a couple of days back extended the due date for filing the tax return by a month and this will no doubt bring cheer to many taxpayers. However, some taxpayers may be thinking of the consequences in case they are unable to file the tax returns within the new due date, i.e. 31 August 2018. There could be a plethora of reasons for delay/ non-filing of income-tax returns such as non-availability of relevant documents and information, lack of time, personal exigencies, etc.

Irrespective of the reason, it is important to be aware of the consequences under the Income-Tax Act, 1961, (ITA) for delay/ failure to file the income tax return on time.

A) Penalty for default in filing income-tax return – under section 234F of ITA

The ITA provides the taxpayer a chance to file the return even after the due date. However, a new section 234F was inserted under the ITA which prescribes a penalty for filing the tax return after the due date. A penalty of Rs 5,000 is payable in case the return is filed after the due date but by 31 December of the relevant assessment year (i.e., 31 December 2018 for tax returns related to FY 2017-18). If the return is filed after 31 December 2018 but by 31 March 2019, the penalty shall be Rs 10,000. However, the penalty is limited to Rs 1,000 in case the total income of the individual does not exceed Rs 500,000. The tax-return can be filed after the due date only once the penalty has been paid.

Also See: All that you need to know about TDS on rent and consequences of non-compliance

B) Liability to pay interest on taxes due – under section 234A of ITA

The taxpayer is liable to pay a simple interest at the rate of 1% for every month (or part of month) on any outstanding tax liability. The interest is computed for the period immediately following the due date, till the date of filing the return. In case the individual does not file an income-tax return, interest is calculated till the month in which the Tax Officer completes the assessment.

C) Penalty for under reporting income – under section 270A of ITA

The ITA also has provisions levying a penalty for under-reporting of income by any taxpayer. The penalty in such a case would be a sum equivalent to 50% of the amount of tax payable on the under-reported income.

According to this provision, where an income-tax return has not been filed, the under-reported income shall include the income as assessed by the Tax Officer, exceeding the maximum amount not chargeable to tax (i.e., Rs 250,000 in case of resident individuals below the age of 60).

D) Prosecution/ fine for non-filing of income-tax return – section 276CC of ITA

In case an individual wilfully fails to furnish the income-tax return before the end of the relevant assessment year and he has a tax liability exceeding Rs 25 lakh, he shall be punishable with rigorous imprisonment for a period ranging between six months to seven years, and with a fine. However, in other cases where the amount of tax evaded is less than Rs 25 lakh, the individual can be imprisoned for a period ranging from three months to two years along with payment of a fine.

A relief is given to small taxpayers from these stringent provisions. In case the tax liability of the individual, after credit for any tax deducted at source and advance tax paid, does not exceed Rs 3,000, then the individual shall not be subjected to these provisions.

Also See: What is Form 26AS and how does it help in filing ITR?

E) Other implications

Non filing or delay in filing of tax return also has the following additional implications:

# A return filed after the due date is not eligible to be revised.

# Carry forward of losses (other than loss from house property) will not be allowed if the return of income is filed after the due date or not filed at all.

# Any tax refund due to the taxpayer will be processed only if the tax return is filed.


The ITA has wide-ranging implications for default in complying with tax return filing obligations and some of the implications may be triggered even if there is no outstanding tax liability at the time of filing the tax return. Accordingly, in order to avoid litigation and paying interest/ penalty or fine, it would be prudent for taxpayers to file their income-tax returns within the prescribed due dates and have peace of mind as far as taxes are concerned.

(The author is National Leader Tax – Grant Thornton India LLP, with inputs from CA Sudeep Das)

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