Updated : October 17, 2024All about penalty and charges for late filing of Income tax return
Overview : Income tax return filing is one of the most important compliances that each taxpayer must adhere to. Filing your income tax return within the deadline is always advisable as it can help avoid penalties, fines or prosecution involved in late filing. Depending upon the type or category of taxpayers, penalty for late filing ITR may vary from one entity to others. Go through the further post to gain insight into ITR filing charges and penalty for late filing ITR in India.
Income tax filing offers a number of benefits to the taxpaying entitties; be it an individual or business entity. Filing income tax return within the due date is necessary; failing to which may attract various penalties or (and) prosecution. ITR filing is a necessary compliance requirement for taxpayers and corporations. The taxpayers must be aware of the due date for filing their ITR returns so as to avoid penalty & charges for late filing income tax returns and thus keeping unnecessary financial burden at bay.
What is the category-wise tax penalty for late filing or non-filing of Income tax returns?
Depending upon the type or category of taxpaying entity, the tax penalties for late filing or not filing ITR within the due date goes as below;
Salaried Individuals
They are divided into three categories as per their annual income range.
1. Total annual income below Rs. 2.5 lakh
If a salaried individual with salary below Rs 2.5 lakhs, fails to file his ITR within the due date for the financial year, no penalty for not filing tax return is levied.
2. Total annual Income below Rs. 5 lakhs
Any salaried individual having salary upto or not more than Rs. 5 lakhs may have to face a late ITR filing penalty of below or up to Rs 1,000. In this case, maximum tax penalty for late ITR filing can’t exceed Rs 1,000.
3. Total Annual Income above Rs. 5 Lakhs
Any salaried person with a total annual income above Rs 5 lakhs may have to face a penalty of up to Rs. 10,000 if fails to file ITR within the deadline or due date.
Self-Employed Individuals
For self-employed individuals, the amount of ITR filing penalty for filing after the due date is not more than Rs. 10,000.
Companies
Due to late ITR filing, companies may have to bear a penalty of up to Rs 10,000.
Senior Citizens
The Income tax return filing penalty under Section 234F is only applicable to senior citizens who meet the following criteria;
- Aged between 60-80 years and total annual income not more than Rs. 3 lakhs.
- Aged over 80 years with total annual income more than Rs. 5 lakhs.
Penalty under Section 271H
Those failing to file TCS or TDS statements within the due date have to pay a penalty ranging between Rs. 10,000 to Rs. 1,00,000 along with late ITR filing penalty under Section 234F. Under Section 234F, an ITR filing penalty of Rs. 200 per day is charged until TCS or TDS is paid.
Is late penalty levied on people below taxable limit for late ITR filing?
In general, no late income tax return penalty is imposed for non-filing of ITR on individuals and corporations with their total income below the tax exemption limit. However, the Union Budget 2019 made amendments in the Income Tax Act which is effective from AY 2020-21, which mandates ITR filing for taxpayers meeting the following conditions despite not having a taxable income.
- People who have made expenditure towards electricity consumption over Rs. 1 Lakh.
- People who have a total deposit of more than 1 crore in one or more current accounts with a bank.
- Those who are Indian residents but are making income from foreign assets.
If you meet any of these or other conditions mentioned in the latest amendments of the Income Tax Act, you will have to pay the prescribed penalty for not-filing tax returns. As mentioned above, it applies even to those who do not have a taxable gross income.
Now, you are aware of the conditions making you liable for filing ITR, you should also keep some important points in mind.
Can one be imprisoned for not filing a tax return?
In case a taxpayer fails to file his income tax for an assessment year, he will get a notice from the Income tax department under Section 142 (1), 148 or 153A. Even after this notice, ITR is not filed, the taxpayer may face prosecution under Section 276CC of the Income Tax Act for tax evasion.
Some conditions in which a taxpayer may face imprisonment are as follows;
- For possible tax evasion exceeding Rs. 25 lakhs: Penalty for not filing ITR plus imprisonment of at least 6 months, which can extend to 7 years.
- For other cases: Prescribed penalty with imprisonment of at least 3 months which can be extended to up to 2 years.
Conclusion
ITR registration & filing is among necessary returns for an individual, corporations and other entities. The key element that needs to be kept in mind is that always make sure to file your income tax return within the due date of the year. This practice will not only ensure compliance to Income Tax bodies but also sets you free from charges and penalty for not filing tax return or late filing of ITR. We hope this post has helped you gain better insights into penalties and charges for late filing of income tax returns.
