An income tax return is a summarized document that outlines a taxpayer’s earnings over a fiscal year. If an individual fails to file their income tax return, they will incur a penalty. The Income Tax department has different tax rates for various income brackets.
The department also sends reminders to encourage the timely filing of income tax returns. Non-compliance, such as failing to meet obligations or neglecting to file an ITR, can lead to fines and penalties.
For the financial year ending on March 31, 2024, the deadline for individuals to submit their Income Tax Returns (ITRs) is July 31, 2024. However, filing ITRs can be a complex process, particularly for individual taxpayers who might struggle with the various schedules and disclosures required.
Gathering all necessary information and maintaining records of expenses from the previous year can be challenging, often resulting in missed deadlines. Consequently, many individuals may require additional time to complete their tax returns to avoid adverse actions from the Income Tax authorities.
The Income Tax Department allows taxpayers who miss the original deadline to file a belated return by December 31 of the same calendar year. Thus, the deadline for filing a belated return for AY 2024-25 is December 31, 2024.
Penalty On Delayed ITR
When a taxpayer files a belated income tax return, they may incur penalties based on their income level. A penalty of Rs. 1,000 applies if the income is below Rs. 5,00,000, while a penalty of Rs. 5,000 is enforced if the income exceeds Rs. 5,00,000. Additionally, late filers might face interest charges and lose certain benefits typically enjoyed by timely filers.
Ensuring tax compliance is crucial, as it is a legal obligation that taxpayers must adhere to. Responsible financial practices are essential for a seamless and trouble-free tax filing process. For further insights into the consequences of delayed income tax return submissions and options for requesting extensions, please find detailed information below.
Under the provisions specified in section 234F of The Income Tax Act, individuals who file their Income Tax Returns (ITR) after the due date are subject to a late filing penalty. The maximum penalty for late filing has been revised to Rs. 5,000 starting from the Financial Year 2021, down from the previous limit of Rs. 10,000.
However, taxpayers are advised to adhere to the filing deadlines, as missing the deadline can result in not just the late filing penalty but also other penalties and restrictions enforced by the Income Tax Department.
For individuals with a total income of INR 5 lakh or less, the late filing penalty is capped at Rs. 1,000, offering some relief to small taxpayers. On the other hand, individuals with higher incomes may be liable to pay the full penalty of Rs. 5,000 if they fail to file their ITR within the specified deadline.
What is the interest on unpaid taxes?
Late filers may incur penalties and owe interest on unpaid taxes as specified under Section 234A of the Income Tax Act. The interest rate is currently 1% per month or part thereof, calculated from the day after the ITR filing deadline. This interest is intended to discourage delayed tax payments and encourage prompt compliance.
To ensure timely processing of government refunds for overpaid taxes, taxpayers should submit their ITRs before the deadline. Missing the deadline may lead to extended waits for refunds, potentially causing financial difficulties and cash flow challenges.
Exemptions from Penalty
If an individual’s taxable income is below the basic exemption limit and they file an Income Tax Return (ITR) to claim a refund, they are not subject to a penalty for late filing. The basic exemption limit refers to the gross taxable income before any deductions are applied.
