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What will happen if I do not file my Income Tax Return (ITR) ?

Updated on: 23 Nov, 2023 01:22 AM

Due Date Extended !!
Due date for Income Tax Return filing has been extended from 31st July 2019 to 31st August 2019 by the Income Tax Department

Have this thought ever striked your instincts – What will happen if I do not file income tax return ??
If yes, you must have dropped this thought!! And either, kept filing your income tax return anyways. Or, you might have made excuses for not filing your return like – you don’t have time.. you have already paid the tax so what’s the need of filing ITR.. etc.
There are many consequences of not filing a return of income. In this blog we try to make you acquaintance with effect of not filing your income tax return.
So that, when you file your return for AY 2016-17 or AY 2017-18 by 31st March or for the upcoming AY 2018-19 you know well in advance why are you filing your taxes.

The discussion can be sub categorized in two parts :-

  1. If you don’t file your ITR because your income does not exceed Rs.2.5 lakhs. Then nothing happens normally.
  2. If you were required to file ITR or if not required (as above), the tax department still asks you file u/s 142(1). But, you fail to do so. Then many repercussions as described below may follow :

Penalty and Interest may be attracted

  • Interest @1% u/s 234A shall be recovered from you if you have any tax liability for the respective year unpaid and are filing a belated return.
  • Penalty amounting to Rs.5000/- u/s 271F may be imposed by the tax department if you fail to file your ITR timely.

Note : Changes have been brought by the Finance Act 2017 which has resultantly increased penalty for not filing or delayed filing of your income tax return. From AY 2018-19 i.e. FY 2017-18 the penalty provisions shall be as under:

  • Penalty of Rs. 5000/- will be charged if you were required to, but fails to file your income tax return by due date i.e. 31st July or 30th Sep, normally. This penalty will be applicable only if you file till 31st Dec.
  • Rs. 5000/- shall stand increase to Rs. 10,000/- if you file even after 31st December.
  • However, penalty amount will be Rs. 1000/- if your income does not exceed Rs. 5 lakhs.

Example: Your income exceeds Rs. 2.5 lakhs for AY 2018-19. Hence, you were required to file ITR by 31st July 2018. But you file your ITR say on

  1. 31st Oct 2018
  2. 14 Jan 2018

In both cases as per amendment bought by Finance Act following penalties may be levied

Solution: You file your ITR on

  • 31st Oct 2018

Then the penalty amount shall be Rs. 5000/- if your income exceeds Rs. 5 lakhs or Rs. 1000/- if your income is below Rs. 5 lakhs.

2) 14 Jan 2018

Then the penalty amount shall be Rs. 10,000/- if your income exceeds Rs. 5 lakhs or Rs. 1000/- if your income is below Rs. 5 lakhs.

  • Notice – Sec 142(1)
    If you do not file your ITR, then the Income Tax Department can ask you to furnish it through a notice under section 142(1).
  • Best Judgement Assessment – Sec 144
    In case you fail to file your return of income, the department can presume your income and proceed with computation of your tax liability in the manner as deem fit by the department. But, a notice for the same will be served upon you. So that you can explain the unavoidable reasons for the delay on your part.
  • No loan, No credit card, etc
    The other problems which you might face for not filing your income tax return may out-rise from situations where your filed ITR becomes a documentary need for the process. Like for obtaining loan or any credit facility from financial institutions, for getting your visa done or for claiming refund on excess taxes paid you need to first file the income tax return.
  • No refund, No carry forward of losses
    You can claim refunds and benefit of carry forward only if you file your income tax return.
  • If someone deposited the cash during demonetization period then department may ask you to file the ITR.
    We do sometimes presumes that if taxes are already paid nothing might happen. But, it is not always the case. Some of the above consequences might be followed even in situations when you have already paid taxes in full. As paying tax never relieve us from our duties of filing income tax return by the due date. Also as per Income Tax law if you are required to file your return you must file it as ignorance of law is no excuse in our constitution!! For filing your taxes in the most easiest way log in to , the fastest growing online tax filing website in India.
CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.