What is the Penalty for Late Filing of Income Tax Return?

It is always recommended to file your ITR within the stipulated time period. The last date to file your ITR for the assessment year 2023-24 and for the financial year 2022-23 is July 31st 2022 for individual taxpayers. If you fail to file your ITR may lead to penalties. But some additional consequences can also be faced by an individual that may lead to various inconveniences. Let us understand about the penalty for late filing ITR and all the other consequences in detail in this blog.

Penalty for Late Filing ITR Under Section 234F

As per the new rules that were changed under the Section 234F of the Income Tax Act, if you fail to file your ITR before the deadline, then the taxpayer will be liable to pay a penalty of Rs. 5000 at max.

After the financial year 2021, the income tax department has decided to reduce the maximum amount of penalty for late filing ITR from Rs. 10,000 to Rs. 5000.

Simply put, for the financial year 2022-23, if you file your ITR before the stipulated time i.e. before July 31st, 2022, then you will not have to pay any penalty.

But for those returns that are filed after the deadline i.e. after July 31st, 2022, a penalty of Rs. 5000 will be levied on the individual. But, in order to provide some relief to the small taxpayers, the income tax department has decided to reduce the penalty amount from Rs. 5000 to Rs. 1000, if the total income of the taxpayer is less than Rs. 5 Lakh.

Details of Late Filing Fee

If an individual files his ITR by July 31st, 2022, then no penalty will be levied on the individual either his income is more or less than Rs. 5 Lakh. However, if the individual fails to file his ITR before July 31st, 2022 which is the deadline for ITR filing, then he will have to pay a penalty of Rs. 1000 in case he is a small taxpayer and his gross income is less than Rs. 5 Lakh and the individual will have to pay a penalty of Rs. 5000 in case his gross income is more than Rs. 5 Lakh.

Time reduced to revise your return

It is possible to make mistakes while filing your ITR online. Then, with the help of the new and changed rules, you have the opportunity to rectify that mistake of yours till the end of the respective assessment year. However, the taxpayers had a 2 year long window to revise and resubmit their ITRs after rectifying their errors. This time period has now been reduced to a single year from the end of the financial year. Hence, the sooner someone files his ITR, the longer time period he will get in order to rectify his errors and revise his erroneous ITR.

Paying the Interest

In case you fail to file your ITR within the specified time period, then you will have to pay an interest at the rate of 1% for every month on the amount of tax that remains unpaid. These guidelines are mentioned under Section 234 A. One should also be aware of the fact that your ITR will not be filed until and unless the tax payment has been made. The penalty will be computed from the date just after the due date of the ITR (which is generally July 31) of the particular assessment year. Therefore, the longer you wait to pay your tax, the larger the amount you will have to pay.

No carrying forward of Losses

If you do not file your ITR within the due date, then you will be deprived of the facility to carry forward your losses(the losses that you incurred under the head capital gains or any sort of loss that you faced in your business) to the next years in order to set them off against your income in the coming years.

Delay in Receiving Refund

In case you are supposed to get an income tax refund from the government because you paid some extra taxes, then you need to file your ITR before the deadline. The refund service will only be availed to you if you have filed your ITR in time.