ITR Filing Deadline: What Happens When Taxpayers Don't File Income Tax Returns on Time? Importance to File Your ITR On Time: Benefits & Drawbacks

The income tax filing deadline is near the end, and any failure to file your tax returns can attract some consequences such as penalties. Taxpayers hardly now have less than a week to file their income tax returns. The last date to file ITR is 31st July 2023. The income tax department has also advised taxpayers not to wait for the minute.

Failure to file by the deadline may lead to penalties. Taxpayers who miss the deadline could face a penalty of Rs. 5,000 under Section 234F. However, for individuals with an income of less than Rs. 5 lakhs, the penalty is reduced to Rs. 1,000,

If an individual earning income misses the ITR filing deadline, they can still do so by paying a late fee. The late fee is Rs. 5,000 for an annual taxable income of Rs. 5 lakhs or more, and Rs. 1,000 for taxable income below Rs. 5 lakhs.

To avoid such penalties and fees, it's advisable to file your returns promptly, preferably before the July 31 deadline. Once all your data is ready, don't delay in filing. Understanding the costs and consequences of late tax return filing is essential to maintain compliance and financial well-being.

Consequences For Not Filing Income Tax Returns on Time

Late filing of income tax returns can result in various adverse consequences, affecting individuals and businesses alike. The following are some of the potential outcomes:

1. Accrual of Interest and Penalties

If you miss the income tax filing deadline, the tax amount you owe doesn't magically disappear. On the contrary, it starts accruing interest and penalties from the due date until the date of filing. The longer the delay, the higher the interest and penalties you'll have to pay, leading to an increase in your overall tax liability.

2. Loss of Refunds

Failing to file your income tax returns on time may lead to the loss of any potential tax refunds. If you are eligible for a refund, you won't be able to claim it until you file your returns. This delay can cause financial strain, especially if you were counting on the refund for personal or business needs.

3. Inability to Carry Forward Losses

For businesses and individuals with capital losses or business losses, timely filing of income tax returns is essential. If you don't file your returns on time, you might lose the opportunity to carry forward these losses to offset future gains. This could result in higher tax liabilities in the subsequent financial years.

4. Prosecution and Legal Consequences

Continued non-compliance with income tax laws can lead to prosecution and legal consequences. The tax authorities have the authority to initiate legal action against individuals or businesses that consistently fail to file returns or engage in tax evasion. Legal battles can be costly, time-consuming, and damaging to one's reputation.

5. Reduced Credibility and Loan Approvals

Late or non-filing income tax returns can impact your financial credibility. Banks and financial institutions often require income tax returns as proof of income for loan approvals or credit applications. Failure to provide these documents promptly may lead to loan rejections or unfavorable lending terms.

6. Loss of Government Benefits and Subsidies

Government subsidies and benefits, such as food assistance programs or housing schemes, may require individuals to present their income tax returns. Failure to file returns on time can result in the loss of access to these essential support systems.
 

Will Govt. Extend the ITR Due Date 31st July For FY (2022-23) AY 2023-24?

No, there will be no extension of the July 31 deadline for filing ITR. Taxpayers whose accounts do not require auditing are required to file their ITR by July 31.

The Revenue Secretary had already confirmed earlier this month that the Finance Ministry has no plans to consider extending the Income Tax Return due date.

Expecting an extension of the ITR due date this year is not advisable, as it may not occur. In the previous year as well, the due date for taxpayers not requiring account audits was not extended beyond July 31.

Steps to e-file your Income Tax Returns

1. The first step is to visit the official website of the income tax department and be redirected to the login page. Fill in relevant your ID & password then click “continue”.
2. After login into the account, click on the tab “e-File” and choose Income tax Returns there and click on “File Income Tax Return”.
3. Then On the next page, you need to select the relevant Assessment Year and click on Continue.
4. After this, you need to select the method to file your returns whether online or offline. Make sure you choose for online (Which is also recommended) way to file income tax returns
5. You need to select whether you want to file your income tax returns as an individual, Hindu Undivided Family (HUF), or others. Select “Individual”.
6. After that, choose the applicable income tax returns form to file. For instance, Individuals and HUFs (Hindu Undivided Family) can file ITR (who don't have income from business or profession). Similarly, in the case of an individual, they can choose the option ITR-1 or ITR-4. Here you will have to press on the tab 'Proceed with ITR1'.
7. The next step, you need to answer some of the questions related to the reason for filing your returns above the basic exempted limit or because of the seventh provision under Section 139(1). According to the section, the person can file their income tax returns if the aggregate amount of an individual is more than Rs.1 crore in one or more current accounts during the same year, exceeds Rs.2 lakh on a foreign trip, or if payment of more than Rs.1 lakh is paid on electricity bills. 
8. On the next page, you need to fill in your bank account. (pre-validate it) If you have already provided the details of your bank account.
9. Then you will be on a new page to file your ITR. This current page will include much information filled (Pre-filed). Make sure all the details mentioned are correct & relevant. Validate the summary of your returns. The last step is to verify your returns and send a hard copy to the Income Tax Department. 

Steps to check ITR refund status: 

• Firstly, visit the Income Tax Department’s (https://www.incometax.gov.in/iec/foportal) website.
• Secondly, log in with your PAN details and user id. 
• Then Go to the option ‘My Account option and go to 'Refund/Demand Status. 
• After this, select ITR and click on your acknowledgment, number https://www.incometax.gov.in/iec/foportal. 
• Lastly, you will be redirected to a new web page with all your tax details, along with your refund status. 

Checking ITR refund status using the NSDL website 

• Visit the official website. 
• Go to the provided link to proceed with the taxpayer refund status. 
• Enter your PAN details and select the Assessment Year (A.Y.) 2022-23. 
• Click submit. 
• Your income tax returns status will be displayed on the screen.

Benefits of Filing Income Tax Returns

Avoiding Penalties

One of the most compelling reasons to file your ITR on time is to avoid penalties and late filing fees imposed by the tax authorities. Failing to meet the deadline can lead to financial consequences, making it essential to adhere to the due date.

Ensuring Financial Transparency

Timely filing of ITR promotes financial transparency. It enables the government to track and analyze income patterns, identify tax evasion, and ensure a fair tax system.

Timely Refunds

For those eligible for tax refunds, filing ITR on time expedites the refund process. Timely refunds provide much-needed financial relief and facilitate better financial planning.

Impact on Loan Applications

Financial institutions consider ITR documents when evaluating loan applications. A timely ITR filing enhances your creditworthiness and increases the chances of securing loans at favorable terms.

Grow Financial Credibility

Filing ITR punctually contributes to building a positive financial reputation. It reflects your responsible financial behavior and reliability as a taxpayer.

Promoting Responsible Financial Behavior

Adhering to ITR deadlines cultivates a sense of financial responsibility. It instills discipline in managing finances and encourages taxpayers to maintain accurate records.

Also Read: GSTN Issued An Important Advisory On The e-Invoice Exemption Declaration Functionality Now Available

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