What happens if ITR is not Filed?

consequences of not filing — (Source: legalsuvidha)

If the income tax is not filed for the annual financial year, you will likely be pulled up by the government. Also, it is a bad practice not to comply with these orders as it can backfire on you if you need to immigrate or secure a loan.

Hence all citizens should be made aware that there is a penalty if ITR is not filed.

This article will look at the various penalties, dates, and consequences of not paying the income tax. You can read on to find out the answer to “what if I don't pay income tax in India?”

What are the dates for filing income tax?

The important dates for filing income tax for the Financial Year 2020-21 is as follows:

Category of Taxpayer	Due Date FY 2020-21 for Tax Filing
Individual/Hindu Undivided Family/AOP/BOI (no auditing required)	31st July 2021
Businesses that require auditing	31st October 2021
Businesses that require TP Report	30th November 2021

What is the importance of filing ITR?

As a responsible and compliant citizen, one is required to file tax returns. The benefits and importance of doing so are enlisted below:

To avoid a penalty: The tax department levies heavy fines on individuals who do not file and pay their taxes. As per section 234F, a fine of Rs.10,000 will be levied for failing to file tax returns, which is quite a heavy price to pay for an average person.
To obtain a loan from a bank: When applying for a loan to purchase a house/car or medical treatment, the ITR for the previous three years is a must.
ITR details are vital: These documents are essential for proving your salary as they are more detailed than Form 16. It contains details of your income from salary and other sources.
To obtain VISA: Embassies of some foreign countries like the UK, US, Canada, and Australia ask for ITR receipts of the previous year to process VISAs. It helps to assure them that you are capable of taking care of yourself while you reside in those countries.
To make up losses faced in the next financial year: You cannot carry forward any losses to the next financial year unless you file an ITR. Thus, it is important to file the returns so that you can claim losses in subsequent years.

How to check if ITR is filed or not

To check if you have filed the ITR for previous years, you need to follow the steps below on how to check if the ITR is filed or not.

Step 1: Visit the ITR website, which is https://www.incometaxindiaefiling.gov.in/home.

Step 2: Select the ‘ITR-V Receipt Status.’

Step 3: Input your PAN and the Assessment Year.

Step 4: Key in the Captcha code, then submit.

Step 5: If you have filed returns for that year, you will be able to see ITR-V Received. However, if you have not filed, a message to that effect will be displayed.

Consequences of not filing income tax

Here are the consequences of not filing ITR

For salaried person

Ever since the rule incorporated in 2017-18, any lax in paying income tax will lead to spending a compensatory sum of Rs.10,000. However, if you file your ITR after 31st August and before 31st December, a penalty of Rs.5000 will be levied. However, if your income does not exceed Rs.5 lakhs, Rs.1000 will be levied for the delay.

For self-employed

The rule for self-employed people is the same as above. Rs.10,000 is paid as a penalty in case of general late payment, and if you have filed the ITR after 31st August but before 31st December, you have to pay a fine of Rs.5000. And, in the case your income does not exceed Rs.5 lakhs, you need to pay Rs.1000.

For companies

The rule for late payment of ITR is the same for companies as well. The penalty will be Rs.10,000, but if the income is less than Rs.5 lakhs, you need to pay a fine of Rs.1000.

For senior citizens

Senior citizens will also need to pay a late fine of Rs.10,000 if they fail to declare their ITR by the due date, and if their income is less than Rs.5 lakhs, a fine of Rs.1000 will be imposed.

Always check what happens if ITR is not filed if you fail to service the due amount within its deadline.

What if we have missed the date?

It may be the case that if ITR is not filed within the due date, taxpayers can still file the returns later after clearing the requisite fines. This filing is called belated returns. In such cases, a fee of Rs.5000 is processed. Anything later than 31st December, and you will have to pay a fine of Rs.10,000.

What if income tax is not filed for previous years?

If ITR is not filed for previous years, then you can file it after the due date. However, you have to pay a fine of Rs.5000 for missing the deadline. If you have a genuine reason for not filing and the officer is satisfied with your explanation, you may not have to pay any fines.

Are there any charges and penalties?

For the assessment year 2020-21, the taxpayer is liable to pay Rs.5000 if he/she declares ITR after the deadline but on or before 31st December.

And, he/she is likely to pay Rs.10,000 if he/she files ITR after 31st December and before 31st March.

Rules changed because of COVID

Because of COVID, the government extended the ITR declaration up to 10th January 2021 from 31st December 2020.

In conclusion, if an income tax return is not filed, citizens and businesses are likely to pay a penalty. To avoid this, all individuals should speedily clear their income tax dues. Non-filing of income tax returns is a serious offence, and people should be aware of the indignity of the offence.

Frequently Asked Questions

✓ What happens if I don't pay income tax in India?

If a person does not file ITR and misses the ITR date, his returns will be filed late, and refunds, if any, will be processed late. Also, a late filing fee is applicable under Section 234F.

✓ Can I not pay the penalty on the late filing of income tax?

You can only avoid paying the late fine if you have given the Income Tax officer a suitable explanation for the same and one, which he finds acceptable. In such cases, it is up to the officer's discretion to prevent you from paying any fine.

✓ Can non-filing of ITR lead to imprisonment?

Non-filing of ITR can lead to imprisonment, where the term can vary between 3 months and 2 years.