Consequences of Late ITR Filing – Interest, Penalty and Prosecution Risks
Filing income tax return on time i.e. on or before the due date is the most important task for any tax payer.
Late filing of income tax returns takes away many benefits from the tax payer. Apart from lesser exemptions, the tax payer will be required to pay fine as well. Taxpayers should avoid the practice of filing belated return.
Delay in filing the return of income may attract certain adverse consequences. Following are the consequences of delay in filing the return of income:
Relevant provisions |
Consequences |
Interest U/s 234A |
Interest under section 234A shall be levied if the Income-tax return is furnished after the due date or is not furnished.
Simple interest shall be charged at the rate of 1% per month or part thereof.
Interest on belated return—— The interest shall be charged for the period commencing from the date immediately following the due date for filing of return of income and ending with the date on which the return of income is furnished.
Interest if return not filed—If the income-tax return is not furnished, interest shall be charged for the period commencing from the date immediately following the due date for filing of return of income and ending with the date on which the best judgment assessment is completed.
Interest if updated return is filed— The interest shall be charged for the period commencing from the date immediately following the due date for filing the original return of income and ending with the date on which the updated return is furnished. |
Levy of fee under section 234F for default in furnishing return |
Fee
• Rs. 5,000/- if the total income of an assessee exceed Rs. 5 lakh.
• Rs. 1,000/- if the total income of an assessee does not exceed Rs. 5 lakh.
Exception-
If total income is below taxable limit, late filing penalty under Section 234F is not applicable
However, interest under 234A will still apply if any tax was due |
Loss of Carry Forward Benefits |
Late ITR filing can lead to denial of carry forward of losses under:
• Capital Gains
• Business and Profession
• Speculation business |
Delayed Refunds |
Belated returns are processed after all timely ones, leading to queues and delays.
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Higher Risk of Scrutiny and Notices |
Non-filing or delayed filing can trigger scrutiny or compliance notices and resultantly it will lead to assessment proceedings
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Prosecution Risk: The Extreme Consequence |
What is the punishment and fine for the offence under section 276CC?
Rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine, where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds Rs. 25,00,000;
With imprisonment for a term which shall not be less than 3 months but which may extend to 2 years and with fine, in any other case.
If any person is convicted again of the similar offence under this provision, he shall be punishable for the second and for every subsequent offence with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine.
Prosecution under Section 276CC shall be launched if a person fails to furnish the return of income under the following provisions:
• In accordance with Section 139(1);
• In response to a notice issued under Section 142(1)(i);
• In response to a notice issued under Section 148 for re-assessment; or
• In response to a notice issued under Section 153A for assessment in case of search.
No prosecution under this provision shall be launched for failure to furnish return of income under section 139(1), if:
The return is furnished by the assessee before the expiry of the assessment year or an updated return is furnished within 24 months from the end of the relevant assessment year; or
The tax payable by such person (not being a company) on the total income determined on regular assessment, as reduced by advance tax or self-assessment tax paid before the expiry of the assessment year or tax deducted or tax collected at source, does not exceed Rs. 10,000. |
In view of the above, missing ITR filing deadline can mean flat late fees, mounting interest on unpaid taxes, the permanent loss of valuable carry-forward benefits, delayed refunds, and even scrutiny or prosecution in extreme cases.
Filing your ITR on time is more than a compliance ritual. It safeguards your financial credibility, ensures smoother access to refunds and loans, and keeps you out of unnecessary legal or administrative trouble. With the deadline closing in, the smartest financial decision you can make right now is to prioritize your return filing and avoid penalties that serve no purpose other than eating into your hard-earned money.
Key takeaways
• Always file your ITR on time, even if you have zero tax liability, to avoid penalties and safeguard future claims.
• If you missed the due date, you can still file a belated return before 31st December of the assessment year.
• For FY 2024–25 (AY 2025–26), belated return can be filed until 31st December 2025 (unless extended).
What is a belated return?
As per section 139(4) of Income Tax Act, 1961, an ITR filed after the due date specified under section 139(1) is referred to as a belated return. Normally, the due date is July 31, but the IT department extended it for this AY as there were many changes in the ITR forms. So any ITR filed between September 15 and December 31 this year (A.Y. 2025-26) would be a belated ITR.
However, belated returns attract penalties and late filing fees.
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