What if you do not file an income tax return?

Filing an ITR is a method to inform the Government about your income. If you don’t inform the government, you have to suffer penalties and prosecution. If you are in a taxable state, then you must file income tax returns. Assume an individual is missing to file an ITR, it may invite a penalty of up to Rs 10,000. Besides this, a delay or pause in the filing of income tax returns also makes you likely to spend interest on the taxable amount.
Taxable Income Range (In Rs.) Tax Rate prior to Budget 2020 (Existing) Tax Rate Post Budget 2020
0-2.5 lakh Exempted Exempted
2.5-5 lakh 5% 5%
5-7.5 lakh 20% 10%
7.5-10 lakh 20% 15%
10-12.5 lakh 30% 20%
12.5-15 lakh 30% 30%
Above 15 lakh 30% 30%

Is it mandatory to file Income Tax Returns?

Yes, it is mandatory to file an income tax return (ITR). If you are not filing ITR, it will not only attract penalties but can also hinder your possibilities of getting a loan, or a visa for travel purposes or property registration. As per the Income Tax Act, the following are the entities or firms that require the necessary filing of ITRs in India:
  • People whose gross total income above Rs 2.5 lakh. T
  • Companies or firms are irrespective of whether you have profit or loss throughout the financial year.
  • Those who want to require an income tax refund.
  • Those who are in requirement to carry forward a need under ahead of income.
  • Resident individuals who have an asset or financial interest in an item located outside India.
  • Residents and signifying authorizations in a foreign account.
  • Those who receive income from assets or property that is below a trust for charitable or religious purposes or a political party.
  • International companies are taking benefit of business in India.
  • Even NRIs (Non-resident Indian) who have income above Rs. 2.5 lakh which is received or followed in India, is required to file an income tax return in India.

Penalty for non-filing of Income Tax Return

An income taxpayer is likely to pay late ITR filing fees of: a) If the tax return is filed after the deadline just on or before December 31 of the appropriate assessment year, the penalty is Rs 5,000. b) If the tax return is registered after December 31 but before the end of the appropriate assessment year, i.e., before March 31, the penalty is Rs 10,000.

At what income do I have to pay taxes?

If you are a small taxpayer whose income is not above Rs 5 lakh then the maximum fees you are likely to spend is Rs 1,000 if the ITR is recorded any time after the expiry of the deadline (i.e. December 31, 2020) but before March 31, 2021. This act of levying late filing fees below section 234F begun in the Budget 2017 and became active for the financial year 2017-18 or assessment year 2018-19 beyond. Assessment year is the year directly following the financial year for which the ITR is filed.

How to file missed tax returns

If an individual is not able to file his/her ITR before the scheduled date, then according to section 139(4) of the Income-tax Act, he/she can file a belated return. A belated return can be deposited at any time before the end of the appropriate assessment year or before the end of the assessment, whichever is ahead. If you are filing a belated return for FY2019-20, then you require to fill the applicable ITRs as mentioned for this FY, and not for any prior or later FY. The appropriate assessment year for a financial year is the directly succeeding financial year. This implies that you can file a belated return for FY2019-20 by March 31, 2021, i.e., before the conclusion of the assessment year (AY)2020-21.

Can you go to jail for not filing taxes?

The brief answer is maybe. You can land in jail for not filing your taxes. You can go to jail for reclining on your return. But you can’t go to jail for not possessing enough money to pay your taxes. The IRS will not put you in jail for not being capable to pay your taxes if you file your return. The following activities will land you in jail for 1-3 years:
  • Tax Evasion: Any step taken to avoid the assessment of a tax, such as filing a fraudulent return, can settle you in prison for 5 years.
  • Failure to File a Return: If you fail to file a return you can settle in jail for one year, for every year you didn’t file.
  • Assisting Someone Evade Taxes: Assisting someone else to get out of paying their taxes can offer a three to 5-year prison sentence depending on what action is performed.

Is it a crime to not file taxes?

Most tax debt is civil, not criminal. If you’re reviewed and it turns out you owe, a civil judgment is placed against you to obtain the remaining money. You can only land in jail if criminal charges are filed against you, and you are executed and sentenced in a criminal procedure. The most popular tax crimes are tax fraud and tax evasion. Tax evasion happens when you use illegal methods to evade taxes. Declaring more children than you possess is an example of fraudulent action. Tax fraud includes intentionally trying to defraud the IRS. This is different than a taxpayer being disturbed by the tax form and arranging numbers in the wrong line.

How to file an income tax return for the last 3 years?

No, you can’t file ITR for the last 3 years. But because of the COVID situation, the due date of ITR for FY 18–19 has been increased to 31st July 2020. In easy words, the law says you can file ITR of any year till the date of the financial year with overdue fees.

Consequences of not filing ITR

Here are some things that will occur if you do not file income tax returns on time:


As we know a penalty is a three-tier fee system that has been proposed for not filing income tax returns within the scheduled date. If a return is registered past the due date, then fees payable will be Rs. 5,000, else it will be Rs. 10,000. Nonetheless, in the case of taxpayers whose annual income does not exceed Rs. 5,00,000, the fees payable would be limited to Rs. 1,000.

Reduced time for improving your income tax returns

If you are filing an ITR and you are ending up with an error, there are some rules to follows. Earlier, taxpayers have a 2-years to examine and resubmit an incorrect ITR, which has now been decreasing to one year from the end of the financial year. Hence, as soon as you file, the longer would be the window open with you for reviewing your returns to correct errors if any. This new tax system has been made voluntary and remains to co-exist with the old one that covers three tax rates and several tax exemptions and deductions available to a taxpayer. The new income tax slabs and rates have come into force from April 1, 2020, for FY 2020-21.

No carry forward of losses

If ITR is not filed within the due date, the taxpayer will not be authorized to carry ahead any loss below the head “ profits and additions of business or profession” or “capital gains”. However, unabsorbed loss and loss under the head “income from house property” shall be authorized to be carried forward. As we know 30.09.2020 is the end date to file a return of income for FY 2018-19 and hence Income Tax department is driving a campaign where they send message and e-mail such as your pan has been flagged for non-filing of itr to people those who have done several high-value transactions but have not filed their return of income.

Delay in the method of return of income

Once the return is filed and affirmation of the same is duly performed, the primary processing center in Bangalore, of the Income Tax Department, prepares the income tax return. It is simply then that the tax liability or refund of the taxpayer is describing. Thus, in case the taxpayer is demanding a refund, the delayed ITR Filing FY 2020-21 will occur in a delayed receipt of the tax refund. Thus, it is desirable for every taxpayer to file an income tax return on time so that we can evade certain consequences including the tax of a mandat

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