Consequences of Late Filing of Income Tax

Income tax filing due date is fast approaching for individuals (July 31, 2013 for most of us). Have you filed income tax? Or are you still busy in day to day activities or just being lethargic? Remember there are negative consequences for delay in filing income tax.

When is due date?

In India, financial goes from Apr 1 to March 31 and assessment year is the year after financial year gets over. So, for last financial year was from Apr 1, 2012 to March 31, 2013 and its assessment year is from Apr 1, 2013 to March 31, 2014. Due date for filing of income tax for different person/company/entity is as follows:

  • When assessee is a company – Due date is 31-Oct of Assessment year
  • When assessee is a person or non-company entity (e.g. HUF)
    • When accounts of assessee needs to be audited – Due date is 31-Oct of Assessment year
    • When person is working partner of a firm whose accounts need to be audited under any law – Due date is 31-Oct of Assessment year
    • In all other cases – Due date is 31-July of Assessment year.

What are the consequences of filing late?

Man Running Clock in Background Lion Roaring

  1. Under Section 234A, the assessee will be liable to pay interest of 1% per month on the tax due to be paid until the assessee files income tax.
  2. If assessee fails to file income tax by end of assessment year (one year after end of financial year) then Assessing Officer may impose a penalty of Rs 5000 under section 271F of Income Tax Act 1961.
  3. An assessee may not file revision if income tax was filed late for any financial year. Thus, the assessee needs to be absolutely right in providing the information while filing income tax.
  4. An assessee may not carry forward losses declared under head “Income from business and profession” (except depreciation cost) and “Capital Gains” (except losses from house property) if the assessee files income tax late. Refer to How to Adjust Losses Against Gains to Save Income Tax? to know what losses may be carried forward even if income tax has been filed late.
  5. If an assessee will get refund from income tax then filing income tax late also delays getting the refund.
  6. An assessee may file return for any financial year until the end of two assessment years beyond which Income Tax department will not even accept the income tax returns. End of two years does not give an individual chance to escape filing income tax and rather a warning that Income Tax Department may start hunting for the assessee.



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