ITR Filing 2024: Know Consequences for not Filing ITR within Due Date

Introduction

Wondering what will happen if you procrastinate and don't file your income tax return ( ITR ) by July 31 this year? Most of the businesses fail to know the importance of filing ITR. For businesses, the filing of ITR is mandatory irrespective of their status of business or number of transactions and turnover. Not only for businesses but also the households must file ITR if they have income from any source. Also, for salaried individuals filing ITR is necessary as it comes with many benefits to the assessee.

Now that you’re aware of the reasons and benefits of filing tax returns take a look at how you can go about filing your returns.

What Is ITR?

Income Tax Return or ITR is a form used to show your gross taxable income for the given fiscal year. The form is used by taxpayers to formally declare their income, deductions claimed, exemptions and taxes paid. Therefore, it calculates your net income tax liability in a fiscal year.

According to the Income Tax Act of 1961, a person under 60 years of age must file tax returns if a part of their income is taxable. If your taxable income exceeds Rs. 5 lakh in a financial year or you have paid advance tax, you also need to file an ITR. When filing tax returns, you also have to pay your due taxes as decided by your applicable income tax slabs.

Read more: CBDT notifies ITR Forms and Income Tax Return Acknowledgement for AY 2023-24

Who should file Income Tax Returns?

According to the Income Tax Act, income tax has to be paid only by individuals or businesses who fall within certain income brackets. Mentioned below are entities or businesses that are required to compulsorily file their ITRs in India:

The tax exemption limit for an individual depends on several factors, such as gross income, choice of tax regime, age, gender, etc.

Businesses: All companies and business entities operating in India, irrespective of their financial performance, are required to file income tax returns and disclose their earnings for the designated fiscal period.

Self-employed Individuals: Self-employed individuals such as freelancers, designers, and other professionals are eligible to file ITR.

NRIs Earning in India: Non-residential Indians who are generating income in the country are also required to file income tax returns.

Those with Taxable Income: Every Indian who is generating a taxable income should file an ITR.

In simply word, if you earn income in India that exceeds the maximum tax exemption limit, you must file your income tax return ( ITR ).

Those Seeking Tax Refund: If you have paid a higher tax amount than required and want to claim a refund, then you must file an ITR as soon as possible.

Those with LTCG Gains Over ₹2.5: If you have invested in a long-term scheme and are earning capital gains exceeding ₹2.5 lakhs, you are required to file income tax returns.

Foreign Company: Any foreign firm or business operating and earning in India must file an Income Tax Return ( ITR ) based on their respective category

Income Held by Non-profit Organization: If you receive income held by a non-profit organisation or charitable organisation must also file an ITR.

Salaried Individuals: Every salaried employee, regardless of their annual income, must file an income tax return ( ITR ), facilitated by the Form 16 provided by their employer, which details their salary components, tax deductions, and necessary information for ITR filing.

Due Date of ITR Filing 2024

The deadline for filing ITR for the Financial Year 2023-24 (AY 2024-25) is July 31, 2024, but if you fail to file by then, you have the option to submit a belated return by December 31, 2024.

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Late filers of income tax returns may face penalties and accrue interest on unpaid taxes, with interest calculated at a rate of 1% per month or part thereof, beginning from the day after the filing deadline as stipulated in Section 234A of the Income Tax Act.

Know Consequences for Not Filing ITR

Accrued interest: Under Section 234A, if you don't file your ITR by the deadline, you're liable to pay interest on any taxes that are due. This interest is calculated from the day after the deadline until the date when you file your taxes

Late fee charges: Failing to file your Income Tax Return ( ITR ) on time incurs a late fee, with a maximum penalty of Rs 5,000 applicable to individuals earning over 5 lakhs, highlighting the importance of timely action to avoid this charge.

Restrictions on loss carry forward: Generally, you can carry forward certain losses to offset future gains for tax purposes. However, if you file late, you lose the opportunity to carry forward these losses, except for house property losses

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Refund delays: For those expecting a refund from the government, filing late means you'll have to wait longer to receive it. This can affect your cash flow and financial planning.

Step 1: Login

• Go to the official Income Tax e-filing website and click on 'Login'.
• Enter your PAN in the User ID section.
• Click on ‘Continue’.
• Check the security message in the tickbox.
• Enter your password
• ‘Continue’

Step 2: Go To ‘File Income Tax Return’

Click on the 'e-File' tab > 'Income Tax Returns' > ‘File Income Tax Return’

Step 3: Select the Right ‘Assessment Year

Select ‘Assessment Year’ as ‘AY 2024-25’ if you file for FY 2023-24. Similarly, select ‘AY 2023-24’ if you are filing for FY 2022-23 and use the mode of filing as ‘Online’. Select the filing type correctly as original return or revised return

Step 4: Select the Status

Select your applicable filing status: Individual, HUF, or Others.

Step 5: Select ITR Type

Before submitting your tax returns, determine the appropriate ITR form you should use from the seven available options. For instance, individuals and HUFs who have capital gains but no income from business or profession can use for ITR 2.

Also read: Should You File Income Tax Return? Know all ITR Forms and Applicability

Step 6: Choose the Reason for Filing ITR

In the following step, you will be prompted to specify the reason for filing your returns. Select the appropriate option that is applicable to your situation:

• Meets specific criteria and is mandatorily required to file ITR
• Taxable income is more than the basic exemption limit
• Others

Step 7: Validate Pre-filled Information

Ensure to meticulously verify all pre-filled details such as your PAN, Aadhaar, name, date of birth, contact information, and bank details before proceeding further. Additionally, provide your bank account information if not already submitted, ensuring it is pre-validated. As you progress through each step, remember to disclose all pertinent income, exemptions, and deductions. Much of the information will be auto-filled from sources like your employer and bank, so carefully review it for accuracy. Confirm the summary of your returns, validate all details, and proceed with payment of any outstanding taxes if applicable.

Step 8: E-Verify ITR

Failing to verify your return within the specified time limit ( 30 days ) is tantamount to not filing it at all. You can choose to e-verify your return through various methods like Aadhaar OTP, electronic verification code (EVC), Net Banking, or by mailing a physical copy of ITR-V to CPC, Bangalore.

Documents you need to file ITR

 The following documents/information are required for e-filing their ITR:

• Bank Statements
• PAN and Aadhaar
• Donation receipts
• Interest certificates from banks
• Salary Slips
• TDS Certificate
• Aadhaar registered mobile number for e-verifying the return
• Insurance policy paid receipts related to life and health
• Form 16 A / 16B/ 16C
• Stock trading statements from the broker platform
• Bank account information linked to PAN
• Proof of tax- Saving Investments, if any

Also Read : Here’s How to File Income Tax Returns using Offline Utility for AY 2022-23

Conclusion

Filing your tax return involves more than just submitting the ITR form. It's essential to verify the return within 30 days of filing. Failure to verify will result in the IT department not processing your tax return and deeming it 'invalid'. If you receive a notice and do not respond within the given timeframe, it will be considered as if you never filed a return. This could lead to applicable non-filing fees and penalties. It is essential to file your ITR on time to fulfill your legal obligations and maintain your financial well being.  Stay proactive and ensure timely compliance with tax filing requirements to avoid unnecessary complications.

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