It is your responsibility or legal requirement to file your income tax return on time, so that you can easily fulfill your civic duty. If you are late or fail to comply with this obligation, then it will result in many consequences, including penalties and prosecutions.
In this article, we will learn about the penalty system associated with non-filing of ITR and highlight its consequences.
What is the importance of filing Income Tax Return?
Before learning about the penalties, it is important to understand why income tax return filing is necessary. According to our income and the relevant information, we assist the government in surveying fee liabilities, examining the economy, and guaranteeing a fair transfer of assets.
Additionally, documenting personal expense forms helps people and organizations build a strong monetary history, which is fundamental for obtaining credit, visas, and other monetary open doors.
When and how much penalty will be imposed for late filing of the ITR
When, you forget to file your income tax return or do it late, the Income Tax department (CBDT) may imposes a penalty to encourage you to file your ITR on time.
As you all know, in every filing regarding the rules and regulations of a particular sector, if you exceed the time limit or come late, you have to pay a fine or penalty. In simple words, if an individual or entity fails to file their return on or before the deadline or due date, they will be liable to pay the penalty imposed on their ITR.
According to Income Tax Rules, a fixed penalty can be imposed for not filing an ITR, which can range from Rs 1,000 to Rs 10,000 depending on the taxable income and time gape by the defaulter.
Rate of Interest on Late Filing the ITR:
According to the Income Tax rules, interest will also charge on the tax payable amount apart from the prescribed penalty and will also be payable by the offender.
The rate of interest is 1 percent per month, from the last date of Online ITR filing till the actual date of filing. In some cases, rate of interest may increase up to 1.5% per month.
Prosecution for non-filing:
As we know, it is very important to file an income tax return. If even the slightest negligence is shown in filing an income tax return or timely filing is not taken seriously, then it is considered an offense. Which is punishable with the possibility of being criminal. Prosecution and more have been outlined.
If you are running a business, have not been paying your income taxes for several years, are intentionally suppressing your income, or not filing returns, you may want to avoid filing returns to stay on track. In this situation, depending on the offense, a fine and imprisonment of 3 months to 7 years can be imposed. Additionally, the defaulter may be subjected to the sealing, freezing, or confiscation of his Assets.
Consequences of non-filing:
As we all know, it is important for us to understand the income tax return. If it is not done, then we will have to pay an interest penalty.
What if, we have not filed ITR?
The consequences of non-filing ITR go beyond monetary penalties and legal implications. It has been said many times that not filing income tax returns can adversely affect a person’s financial credibility, causing problems when applying for credit cards, getting loan approvals, or affecting investment prospects.
If you fail to file returns, it may result you will face difficulty to obtaining awards or government approvals, hindering personal and professional growth.
Additionally, non-filing can lead to scrutiny by tax authorities, resulting in further investigations and audits, which can be a stressful and time-consuming encounter.
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Conclusion:
Finally, it is a serious matter for the return filer to file their income tax return on or before the due date; otherwise, you will have to pay a penalty.
Penalty of not filing ITR is a serious matter with significant financial and legal consequences. It is necessary for businesses, entities, and individuals to file their ITR on time. So that, they do neither face late fee or penalties nor will liable for any prosecution.
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