We enjoy financial freedom in our country and against that the government asks us to be a responsible citizen and abide by the law by performing our duties on time. Filing returns is an important duty which all of us have to comply with. But most of the time, either we are unaware about the ITR or we just overlook or understate it. This leads to major problems. Consequences of non compliance are as good as mini earthquakes. So heed this article carefully.
As per the Income tax act, 1961 we all have to file returns irrespective of if we fall under the category of taxable limit or no. We have already spoken about NIL returns and if your income doesn’t exceed Rs 2.5 lakh, you should take a look at that article. But filing an ITR is a must.
Delay in filing the ITR may be due to many reasons like losing the documents or some documents weren’t available hence the delay. But not meeting the deadline can have severe consequences. If you fail to file your returns on time but on or before December, you are imposed with the late fee of Rs 5000. If you fail to file your ITR by December you are penalized with Rs 10,000 for the relevant assessment year. And in case your net worth doesn’t exceed Rs 5 lakh then you are to pay Rs 1000 as late fee.
You will have to pay interest of one percent for every month on the outstanding tax liability. If you have a sum of taxes prepaid then that is taken into consideration. But if you haven’t paid ITR for the entire year then you will have to pay interest for the entire year.
Carry forward losses
If you have incurred losses of an asset you cannot carry forward these losses unless you have filed your ITR by due date.
If you have a taxable income but hide it from the government you will have to pay a penalty for concealing income. Penalty as per section 270A for under-reporting and misreporting of income will be imposed on you.
There are stringent rules to tackle those who furnish inaccurate financial statements which can be read in the article: WHAT IS THE PENALTY FOR FILING INACCURATE FINANCIAL STATEMENTS? WHAT IS THE PENALTY FOR NOT FILING FINANCIAL STATEMENTS? SECTION 271FA AND 271FAA OF INCOME TAX ACT, 1961 EXPLAINED
If you are eligible for a refund but do not file your ITR on time then you cannot claim your refund.
No interest on refunds
If you are late in filing your taxes you may lose the interest which you would have received on your refunds.
If you fail to file your ITR you may be prosecuted under section 276CC which means jail upto 7 years and fine.
Complying with the rules set by the government is our foremost responsibility. It is a license of us being the worthy citizens of the nation. So I urge my readers to practice compliance.
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