The last date to file your income tax returns is July 31 for the financial year 2023-24. The Income-tax Act, 1961, stipulates a penalty if an individual fails to file the ITR on time. The penalty can vary based on whether the delay was due to late ITR filing, tax payment or both.

Taxpayers, hence, should file their ITRs on time to avoid the penalty. Don’t wait for the last-minute rush. It has many risks. A technical glitch on the Income Tax Department’s server could prevent you from processing your ITR application or tax payments. This problem could also arise on the bank’s end when processing your payment. So, do it early.

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However, there is no need to panic if you can’t avoid it due to an unexpected situation. You could still file your ITR by December 31 after paying a late fee. Usually, it is Rs 5,000. 

Penalty And Interest:

Section 139 of the Income-tax Act has several sub-sections: Section 139(1) relates to voluntary and mandatory returns, Section 139(3) to report loss, Section 139(4) for late filing, Section 139(5) for revised returns, and Section 139(9) for defective return. Section 139 mandates filing ITR if the income exceeds the exempted limit; section 139 (4) states filing a late ITR three months before the end of the assessment year; and Section 139(1) relates to voluntary return, where there is no penalty. 

Penalty: As per the Income-tax Act, if an assessee fails to furnish ITR within the due date as prescribed under section 139(1), then as per section 234F, he will be required to pay a fee of Rs. 5,000. However, if the total income exceeds Rs 5 lakh, the fee will be Rs 1,000.The penalty is calculated from the last date of ITR filing, which is usually July 31 every year. Besides the late penalty, if taxes are also due, the taxpayer would be liable to pay and interest on the tax payable. 

Interest: The Income-tax Act, 1961, lays down the penalty for a delay in filing ITR under Section 234A, which is a simple interest of one per cent per month or part of the month.

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Consequences of Filing Belated ITR:

The consequences can be severe if you fail to file the ITR by December 31 of the assessment year. The income tax department could issue a notice. If the taxpayer is found to be willfully evading tax, they may face imprisonment, ranging from a minimum of three months to a maximum of seven years under Section 276CC of the Income-tax Act.

If the taxpayer finds an error in the ITR or wants to update the information, it can be done by filing a revised tax return (ITR-U) under Section 139 (8A) of the Act, introduced in 2022. It allows updating details in case of wrong declaration of income, change in income head, updating the tax amount, ITR not filed previously or reducing the unabsorbed depreciation, carried forward loss or tax credit under sections 115JB and 115JC, etc.

ITR filing is vital even if there is no tax liability. It is required to receive a tax refund, if any, avail of the carry-forward benefit to set off capital losses against capital gains in the future (for eight years), obtain loans, or apply for a visa.