Consequences and Penalties for Non-Filing of Income Tax Returns (ITR) – FY 2024-25

As the due date for filing your Income Tax Return (ITR) approaches (15th September 2025 for FY 2024-25), it’s crucial to be aware of the consequences and penalties if you miss this mandatory obligation. Here are the key points that every taxpayer should note:

1. Monetary Penalties

Section 234F Penalty:

• Income above ₹5 lakh: Penalty of ₹5,000 if ITR is filed after the due date.
• Income upto ₹5 lakh: Penalty is reduced to ₹1,000.
• No penalty applies if your income is below the basic exemption limit.

2. Interest on Outstanding Taxes

• Section 234A: Interest at 1% per month (or part of a month) on the unpaid tax amount is charged from the due date until the date the ITR is actually filed and taxes  are paid.

3. Loss of Benefits

• Carry Forward of Losses:
• Most losses (such as business or capital losses) cannot be carried forward to subsequent years unless ITR is filed on or before the due date.
• Exception: Losses from house property can still be carried forward.

4. Prosecution and Imprisonment

• If tax owed is over ₹25,000: Imprisonment ranges from 6 months to 7 years, plus a fine.
• If tax owed is less than ₹25,000: Imprisonment ranges from 3 months to 2 years plus a fine.
• In some cases, prosecution may be initiated even if tax owed is above ₹3,000, with the potential for jail time.

5. Additional Consequences

• No Option to Revise Return: Returns filed after the due date cannot be revised.
• Delayed Refunds: Taxpayers eligible for a refund will experience delays if the return is filed late.
• Difficulty in Loan & Visa Applications: Non-filing may impact future financial dealings and document verifications.

6. Penalties for Other Defaults

• Under-reporting Income: Penalty of up to 50% of tax due.
• Non-filing of TDS/TCS Returns: Penalty between ₹10,000 and ₹100,000.

       Action Steps

• File your ITR well before the due date to avoid penalties, interest, legal prosecution, and loss of financial benefits.
• If you need assistance, consult a Chartered Accountant or tax expert for timely and compliant filing

 
Stay compliant, stay safe!

This newsletter is for informational purposes and reflects the rules and consequences under the Indian Income Tax Act as of August 2025.

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