Have you ever wondered, “What will happen if I do not file my income tax return?” If so, you’re in the right place. This article will help you understand the penalties for not filing an ITR and its various aspects. It will explain the consequences of not filing an ITR and what to do if you miss the ITR filing due date.

Failing to file your return can have various consequences under sections 234A, 271A, and 234F. Read on to find out what these consequences are.

Contents

1. What is an ITR and Why is it Necessary?
2. Consequences of Not Filing ITR
3. Why Should You File Your ITR?
4. Frequently Asked Questions

What is an ITR and Why is it Necessary?

An ITR is a document that needs to be filed with the Income Tax Department of India as a declaration of an individual’s income and assets. This information is used to compute the income and the tax liability of an individual. In India, you must file an ITR under the following circumstances:

• If your total income exceeds the tax-free threshold based on your age.
• When seeking an income tax refund.
• If you’ve earned from or invested in foreign assets during the fiscal year.
• For companies or firms, regardless of profit or loss.
• If you’ve incurred losses in business/profession or under capital gains and wish to carry them forward to subsequent years.
• If you’ve deposited a cumulative amount of Rs 1 crore or more in one or more current accounts with a bank.
• Upon depositing over Rs 50 lakh in your savings bank accounts.
• If your foreign travel expenses exceed Rs 2 lakh.
• When yearly electricity expenditure surpasses Rs 1 lakh.
• If tax deducted at source (TDS) or tax collected at source (TCS) exceeds Rs 25,000 (or Rs 50,000 for senior citizens).
• When business turnover exceeds Rs 60 lakhs.
• If income from your profession exceeds Rs 10 lakhs.

Consequences of Not Filing ITR

If you fail to file your ITR, you might have to pay a penalty for not filing an ITR. Below are the consequences of not filing ITR:

Penalty and Interest

One of the major consequences is the penalty charge for non-filing of ITR.

• Under section 234F, a penalty of Rs.1000 is leviable on income up to Rs.5 lakh and a penalty of Rs.5,000 is levied on income above Rs.5 lakh.
• Under section 234A, failing to file income tax return attracts interest at 1% per month on the outstanding tax amount. This interest amount is calculated from the due date of filing the ITR to the date when the ITR is filed.

Penalty under Section 271H

In addition to the above, if you fail to file your TDS/TCS returns, you might have to pay a penalty ranging from Rs.10,000 to Rs.1,00,000. It might also attract a penalty of Rs.200 per day till the date TDS/TCS is paid.

If you fail to file your ITR by the due date, you can file a belated return. However, it might come with notices, late fees, and penalties. Given below are the penalty provisions:

• If your total income is less than or up to Rs.5 lakh, the maximum penalty levied on you will be Rs.1,000.
• A penalty of Rs.5000 will be charged on income above Rs.5 lakh if you were required to file an ITR but fail to do so by the due date, i.e., 31st July or 30th September. This penalty will be applicable only if you file till 31st December.

Example:

If your income exceeds Rs. 2.5 lakhs for AY 2023-24, you were required to file an ITR by 31st July 2024. But if you file your ITR on 31st October 2024, the penalty amount shall be Rs.5000 if your income exceeds Rs.5 lakh or Rs.1000 if your income is below Rs.5 lakh.

Loss of Benefits

• Carry Forward of Losses: If you have incurred business or capital losses, you cannot claim them against future profits if you haven’t filed your ITR on time. This can disadvantage you in future tax filings.
• Processing of Refunds: If you haven’t filed your ITR, the processing of any tax refunds you may be eligible for can be delayed or even rejected.

Proof of Income

Unlike salaried workers with regular pay slips, freelancers and self-employed individuals rely on tax returns to provide the most dependable verification of their income. Without filing an ITR, you might face difficulties if you need to submit income proof for some reason.

Loan and Visa Application

When applying for a loan or visa, lenders and embassies often require the last three years of Income Tax Returns (ITR) to verify your financial standing and eligibility. Submitting these documents demonstrates your financial history and strengthens your application. If you don’t file your ITR, these applications may get rejected.

Prosecution for Not Filing ITR

Not filing your Income Tax Return (ITR) can lead to serious consequences, especially if you owe more than Rs. 25,000 in taxes. In such cases, you could face imprisonment for 6 months to 7 years and a fine. Even if you owe less than Rs. 25,000, failing to file can still result in imprisonment for 3 months to 2 years and a fine.

Why Should You File Your ITR?

Here are a few reasons why ITR filing is important:

• Tax Refunds: Individuals earning less than Rs 5 lakh annually can reclaim all deducted taxes by filing their tax returns before the July 31 deadline.
• Legal Consequences: Failure to file tax returns may prompt the income tax department to issue a notice, leading to substantial penalties and taxes despite reminders.
• Loss Carryforward: Filing tax returns promptly enables individuals to carry forward losses from business or capital gains, thereby reducing future tax liabilities.
• Income Verification: For freelancers and self-employed individuals without official income statements like salaried employees, filing tax returns serves as the most dependable method to validate income.
• Loan and Visa Applications: Submission of the last three years’ ITR is mandatory for loan or visa applications. Furnishing tax returns from previous years aids lenders or embassies in verifying financial status and eligibility.

Choosing to ignore your income tax return (ITR) filing can lead to significant financial and legal repercussions, but you don’t have to face these challenges alone. Secure a hassle-free, compliant, and efficient income tax return filing experience by consulting with an expert.

With Cogent Professionals get your taxes done early and enjoy peace of mind.

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The Finance Bill 2024, introduced in the Lok Sabha, seeks to implement the financial proposals of the Central Government for the fiscal year 2024-25. This bill includes a variety of significant amendments to the existing tax laws, aiming to address current economic challenges and streamline tax administration. Below, we highlight the key components and changes proposed in this important legislative document. 

The Finance Bill 2024, presented by the Finance Minister Nirmala Sitharaman, aims to give effect to the financial proposals for the year 2024-25. The bill encompasses a broad range of amendments to direct and indirect taxes, reflecting the government’s commitment to fostering economic growth and enhancing fiscal stability.

2. Income Tax Amendments

The bill introduces several changes to the Income-tax Act, focusing on various sections to improve tax compliance and administration. Key amendments include:

• Section 2: Definitions, particularly the definition of ‘dividend,’ have been revised.
• Section 10, 11, 12A, and 12AB: Amendments to provisions related to income exclusions and exemptions.
• Section 37 and 40: Modifications in allowable deductions and disallowances.

3. Corporate Tax Adjustments

Adjustments to corporate tax regulations are another crucial aspect of the Finance Bill 2024. These include:

• Section 115BAC: Changes in the alternative tax regime for individuals and Hindu Undivided Families (HUFs).
• Section 115QA: Adjustments concerning tax on distributed income by domestic companies.

4. Enhancements in Tax Deduction and Collection

The bill proposes enhancements to the tax deduction at source (TDS) and tax collection at source (TCS) mechanisms:

• Section 194: TDS on dividends and other specified payments.
• Section 194-O: Provisions for TDS on payments by e-commerce operators.

5. Amendments to Indirect Taxes

In the realm of indirect taxes, the Finance Bill 2024 seeks to streamline GST and customs duties:

• Central Goods and Services Tax (CGST): Amendments to sections 9, 10, and 16 to clarify the applicability and administration of GST.
• Customs: Changes in sections 25 and 28 to enhance the efficiency of customs duty collection and compliance.

6. The Direct Tax Vivad se Vishwas Scheme

A noteworthy inclusion is the Direct Tax Vivad se Vishwas Scheme 2024, which aims to resolve pending tax disputes amicably. This scheme outlines:

• Declarations: Procedures for filing declarations and payment of disputed taxes.
• Immunity Provisions: Conditions under which taxpayers are granted immunity from penalty and prosecution.

The Finance Bill 2024 represents a comprehensive effort by the Indian government to refine the tax structure, promote compliance, and boost economic growth. By addressing both direct and indirect taxes, the bill aims to create a more equitable and efficient tax system.

This overview encapsulates the essence of the Finance Bill 2024, highlighting the critical changes that taxpayers and businesses should be aware of. As the bill progresses through the legislative process, further details and refinements are expected, which will be crucial for stakeholders to understand and adapt to the new tax landscape.

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The Finance Bill, 2024, introduces several amendments to the Income-tax Act, 1961, and other related acts to continue the reform process in the direct tax system. These reforms aim to provide tax reliefs, simplify the tax structure, and rationalize various provisions. The amendments are categorized into different sections to address various aspects of taxation.

Key Amendments and Provisions

1. Rates of Income-Tax

   The Finance Bill specifies the income-tax rates for the assessment year 2024-25 for different categories of taxpayers, including individuals, Hindu Undivided Families (HUFs), and companies. Notably, the bill maintains the existing tax rates for most categories without any changes.

   • Individuals and HUFs:
     • Up to ₹2,50,000: Nil
     • ₹2,50,001 to ₹5,00,000: 5%
     • ₹5,00,001 to ₹10,00,000: 20%
     • Above ₹10,00,000: 30%
   • Senior Citizens (60-80 years):
     • Up to ₹3,00,000: Nil
     • ₹3,00,001 to ₹5,00,000: 5%
     • ₹5,00,001 to ₹10,00,000: 20%
     • Above ₹10,00,000: 30%
   • Super Senior Citizens (80 years and above):
     • Up to ₹5,00,000: Nil
     • ₹5,00,001 to ₹10,00,000: 20%
     • Above ₹10,00,000: 30%
   • Domestic Companies:
     • If turnover ≤ ₹400 crores in FY 2021-22: 25%
     • Others: 30%
   • Firms and Local Authorities: 30%
2. Surcharge and Cess
   • Surcharge:
     • Income exceeding ₹50 lakhs but not exceeding ₹1 crore: 10%
     • Income exceeding ₹1 crore but not exceeding ₹2 crores: 15%
     • Income exceeding ₹2 crores but not exceeding ₹5 crores: 25%
     • Income exceeding ₹5 crores: 37% (restricted to 25% for incomes under sections 111A, 112, and 112A)
   • Health and Education Cess: 4% on the income-tax including surcharge
3. Deductions at Source (TDS)
   • The rates for TDS on various incomes remain largely unchanged, except for non-domestic companies, where the rate is reduced from 40% to 35%.
   • Specific rates for long-term and short-term capital gains for non-residents are outlined, with increases in TDS rates for transfers occurring on or after July 23, 2024.
4. Measures to Promote Investment and Employment
   • Various incentives and reliefs are provided to promote investments and employment generation. These include accelerated depreciation, investment allowances, and tax holidays for specific sectors.
5. Simplification and Rationalisation
   • The bill aims to simplify the tax compliance process by rationalizing provisions and reducing ambiguities. This includes clarifications on various tax treatments and streamlining documentation requirements.
6. Widening and Deepening of Tax Base
   • Efforts are made to widen the tax base by bringing more taxpayers under the tax net and reducing tax evasion. This includes stricter enforcement of tax compliance and enhanced reporting requirements.
7. Tax Administration
   • Improvements in tax administration are proposed to make the tax system more efficient and taxpayer-friendly. This includes the use of technology for better service delivery and faster processing of refunds and assessments.

The Finance Bill, 2024, continues the government’s efforts to reform the direct tax system in India. By maintaining existing tax rates, providing reliefs, and simplifying procedures, the bill aims to make the tax system more transparent and efficient. Taxpayers are encouraged to understand these changes and comply with the new provisions to benefit from the reforms introduced.

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This article provides a comprehensive overview of the key amendments and provisions in the Finance Bill, 2024, covering aspects such as tax rates, surcharges, TDS, and measures to promote investment and employment. Understanding these changes is crucial for effective tax planning and compliance.

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The Union Budget for 2024, presented by Finance Minister Nirmala Sitharaman, includes a range of reforms and initiatives aimed at boosting economic growth, supporting various sectors, and providing relief to taxpayers. Here are the top 100 highlights from the Budget 2024:

1. Budget 2024 proposes overhaul of Capital Gains Taxes – Short term gains 20% on all financial assets,  On all other other assets it remains as it was,  Long term – 12.5% on all assets, Exemption on profits 1.25 lakh a year

2. Standard Deduction Increased from 50,000 to 75,000.

3. Dedction of Family pension 15K to 25K

4. The New Slabs in the New Regime in #Budget2024, From 0-3 Lakh – Nil , 3-7 Lakh – 5% , 7-10 Lakh – 10% , 10-12 Lakh – 15% , 12-15 Lakh – 20% , If its more than 15 Lakh – 30%

5. Angel Tax Abolished for All Categories of Investors.

6. STT on F&O increased to 0.2 %

7. FM keeps capex at Rs 11.11 lakh crore or 3.4% of GDP

8. Capital Expenditure in the Budget, 2019 – ₹3.1 Lakh Crore, 2021 – ₹4.4 Lakh Crore, 2022 – ₹5.5 Lakh Crore, 2023 – ₹7.5 Lakh Crore, 2024 – ₹10 Lakh Crore, 2025 – ₹11.1 Lakh Crore

9. Fiscal deficit lowered to 4.9% of GDP, market borrowing unchanged at Rs 14.13 lakh crore

10. Fiscal deficit for FY25 further scaled down to 4.9 from 5.1% in interim Budget

11. Aim to reach a fiscal deficit of below 4.5% by FY26

12. BCD on mobile phones, chargers reduced to 15%.

13. Highest Capex Spending proposed to support the economy and job creation in

14. Govt allocates over Rs 3 lakh crore for schemes benefiting women, girls:

15. Limit of Mudra loans to extend to Rs 20 lakh from Rs 10 lakh for those who have availed and paid previous http://loans.New mechanism announced for facilitating continuation of bank credit to #MSMEs during their stress period

16. The Budget focus on employment, skilling, MSMEs and Middle class

17. The Detailed roadmap to pursue nine priorities for generating opportunities for India These are: Agri, Employment, Inclusive development, Mfg and Services, Urban Devp, Energy, Infra, Innovation, R&D, NexGen reforms

18. Turning attention to the full year and beyond, in this budget, we particularly focus on employment, skilling, MSMEs, and the middle class. I am happy to announce the Prime Minister’s package of 5 schemes and initiatives to facilitate employment, skilling and other opportunities for 4.1 crore youth over a 5-year period with a central outlay of ₹ 2 lakh crore

19. ₹2 Lakh crore will be spent on youth and skill development over next 5 years

20. Digital coverage of farm land and farmers to help farmers get their dues.

21. PM Garib Kalyan Ann Yojna was extended for 5 years benefiting 80 crore people

22. Govt to provide incentive to 30 lakh youth entering job market by providing 1 month PF contribution. Govt to launch three employment-linked schemes

23. Govt to set up working women hostels to promote women participation in workforce

24. The PM Vishwakarma Scheme was announced by the Hon’ble Finance Minister in the Annual Union Budget 2023-24 on 01.02.2023 and launched by the Prime Minister on 17.09.2023. The Scheme aims to provide end-to-end support to artisans and craftspeople who work with their hands and tools

25. FM allocated Rs. 1.48 lakh cr for education, employment and skilling. 5 schemes for 4.1 crore youth with an outlay of Rs. 2 lakh cr over a period of 5 years.

26. We will formulate plan Purvodaya for all round development of Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh

27. Govt to provide e-vouchers directly to 1 lakh students every year with interest subvention of 3 per cent of loan amount

28. 1,000 ITIs to be upgraded in hub and spoke model,

29. Model skilling loan scheme will be revised to facilitate loans up to Rs 7.5 lakh

30. New centrally-sponsored scheme for skilling in collaboration with states, industry; 20 lakh youth to be skilled over 5 years

31. Govt will release new 109 high yielding, climate resilient seeds for 32 field and horticulture crops. ₹ 1.52 lakh crore allotted for agriculture & allied sectors

32. Govt to set up working women hostels to promote women participation in workforce

33. Govt to provide funds to private sector, domain experts & others for developing climate-resilient seeds

34. Employment and skilling: 3 schemes for Employment linked incentives based on EPFO enrolment. Scheme A : First timers – 1 month wage to all entering the workforce in all formal sectors/eligibility of salary of 1 lakh a month . Scheme B : Job creation in Manf; Additional Employment in Manf to be incentivised EPFO contribution

35. 100 branches of India Post Payments Bank to be set up in North East:

36. 2.66L Cr Rs. Provision made for rural development

37. Union Budget 2024-25 proposes revision of Model Skill Loan Scheme to help 25,000 students every year.

38. E-vouchers for loans upto Rs. 10 lakh for higher education in domestic institutions to be given directly to 1 lakh students every year for annual interest subvention of 3% of loan amount.

39. Industrial node at Gaya on Amritsar Kolkata Industrial Corridor to be developed

40. On the Amritsar-Kolkata Industrial Corridor, we will support development of an industrial node at Gaya. This corridor will catalyze industrial development of the eastern region

41. More than 100 branches of India Post Payment Bank to be set up in the North East region

42. Budget provides Rs 2.66 lakh crore for rural development

43. Voluntary Closure of LLPs – Much needed Lakhs will save late fees and fine

44. We will formulate a plan ‘Poorvodaya’ for all-round development of the Eastern region of the country, covering Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh.

45. MSME Buyers T/o Threshold reduced for mandatory onboarding to treds reduced from Rs. 500 Cr to Rs. 250Cr.

46. The IBC has dissolved more than 1000 companies, resulting in direct recovery of Rs 3.3 lakh cr

47. Appropriate changes to IBC will be initiated, additional tribunals will be established

48. Rental housing with dorm like accomodation for industrial workers will be facilitated in PPP mode

49. For facilitating term loans to MSMEs, a credit guarantee scheme will be introduced. The scheme will operate on the cooling of credit risks of such MSMEs. A self-financing guarantee fund will provide to each applicant cover of up to Rs 100 crore while loan amount may be larger,

50. Andhra Pradesh Reorganisation Act- Our govt has made efforts to fulfil the commitments in Andhra Pradesh Reorganisation Act. Recognising the state’s need for capital, we will facilitate special financial support through multilateral agencies. In the current FY, Rs 15,000 crore will be arranged with additional amounts in future years

51. Sidbi to open 24 new branches to serve MSMEs clusters, says FM

52. Pradhan Mantri Janjatiya Unnat Gram Abhiyan will be launched for improving the socio-economic condition of tribal communities. The scheme will adopt saturation coverage for tribal families in tribal-majority villages and aspirational districts. This will cover 63,000 villages benefitting 5 crore tribal people.

53. Female Labour Force Participation Rate (LFPR) rose to 37% in 2022-2023 from 23.3% in 2017-2018

54. Women hold 55.6 per cent of PM Jan Dhan Yojana accounts

55. With creation of 8.3 million SHGs, 89 million women covered under Deendayal Antyodaya Yojana-NRLM

56. Under PM Mudra Yojana, 68% loans sanctioned to women and 77.7% women beneficiaries under Stand Up India

57. Nuclear energy to be an important part of energy requirements

58. 1 crore farmers across the country will be initiated into natural farming supported by certification and, branding.

59. 10,000 need-based bio-input resource centers will be established

60. Integrated technology platform to be set up for improving the outcomes under Insolvency & Bankruptcy Code

61. To achieve Aatmanirbharta in pulses & oil seeds, their production, storage, and, marketing

62. Debt recovery tribunals to be strengthened & additional tribunals to be established to speed up recovery

63. 14 large cities with a population above 30 lakh will have Transit Oriented Development plans

64. 1 cr urban poor and middle-class families to be covered under PM Awas Yojana Urban 2.0

65. 100 weekly ‘haats’ or street food hubs in select cities

66. Investment-ready “plug and play” industrial parks to be developed in or near 100 cities

67. 12 industrial parks sanctioned under National Industrial Corridor Development Programme

68. More than 1.28 crore registrations and 14 lakh applications received under PM Surya Ghar Muft Bijli Yojana

69. Pumped Storage Policy to be brought out for electricity storage and smooth integration of renewable energy in the overall energy mix

70. Joint venture between ntpclimited  & BHEL_India to set up a full scale 800 MW commercial thermal plant using AUSC technology

71. Policy to support pump storage projects will be brought to provide round the clock energy, says finance minister.

72. Finance minister Sitharaman announced scheme for rooftop solar panels that would enable 1 crore households to have electricity free of cost upto 300 units per month.

73. substantial sum of Rs. 2.66 lakh crore has been earmarked for the development of rural areas, which includes the enhancement of rural infrastructure.

74. PM Awas Yojana-Urban 2.0 that would fulfill housing requirements of 1 crore poor and middle-class families.

75. Power projects, including setting up a new 2400 MW power plant at Pirpainti in Bihar, will be taken up at a cost of Rs 21,400 crore:

76. Govt will launch Phase IV of PM Gram Sadak Yojana in 25 rural habitations, which have become eligible due to population increase

77. Govt to maintain strong fiscal support for infra projects for next 5 year

78. Govt to facilitate investment grade energy audit of micro and small industries in 60 clusters

79. PM Surya Ghar Muft Bijli Yojana generated remarkable response with 1.8 crore people registering under it:

80. FM proposes central assistance of Rs 2.2 lakh crore for urban housing over next five years.

81. Proposes Rs 1.5 lakh cr long-term interest-free loans to support states towards infra development.

82. Vishnupad Temple Corridor & Mahabodhi Temple Corridor to be transformed into world class pilgrim & tourist destinations

83. Nalanda to be developed as a tourist Centre; Nalanda University to be revived to its glorious stature

84. Next gen reform proposal: NPS Vatsalya in which parents can contribute for child. Coverts to regular NPS account when child becomes major.

85. Government to aid flood-affected states like Bihar, Assam, Himachal Pradesh, Uttarakhand, and Sikkim with Flood Management and Development Support, including Financial Backing for Flood Control Projects

86. Reforms in land administration, urban planning, usage and building bylaws in both rural and urban areas

87. All lands in rural areas to be assigned Unique Land Parcel Identification Number

88. Land registry to be established in rural areas

89. The govt. is committed to the all-around, all-pervasive, and all-inclusive development of people, particularly farmers, women, youth, and the poor.

90. For achieving social justice comprehensively, the saturation approach of covering all eligible people through various programs including those for education and health will empower them by improving their capabilities.

91. Anusandhan National Research Fund to be set up for basic research and prototype development

92. Financing pool of ₹ 1 lakh crore to spur private sector-driven research and innovation at commercial scale

93. The government has proposed to set up a venture capital fund of ₹1000 crore for the space economy

94. Financial Assistance for Veteran Artists’ to provide financial assistance to veteran artists aged 60 years and above having annual income not exceeding Rs. 72,000/-

95. Internships for students of various technical disciplines within MSMEs

96. Government will strive to further simplify, rationalise GST tax structure

97. Technology Centres impart short term industrial training/internship as part of AICTE course curriculum to the youth. The National Institute for Micro, Small and Medium Enterprises (Ni-MSME) under the Ministry is providing internships for students of several educational institutions like IIIT Design Management, Andhra Pradesh, Institute of Public Enterprises, Hyderabad, Hissar Agricultural University Haryana, Rajeev Gandhi National Institute for Youth Development, Tamil Nadu etc

98. Rules for FDI and overseas investment will be simplified, including nudging privatisation, using Indian rupee for overseas investment:

99. Government will develop taxonomy for climate finance

100. Govt will revamp Shram Suvidha Portal to enhance compliance for industry and trade

101. customs duties on 25 critical minerals, and lowers BCD for two of them. Many changes in Basic Custom Duty

102. Technology to speed up digitalization of economy, Jan Vishwas Bill 2.0 to improve Ease of Doing Business, States to be incentivized to implement Business Reforms Action Plans and digitalization

103. NPS for Minors NPS-Vatsalya, a plan for contribution by parents and guardians for minors, to be launched Plan can be seamlessly converted into a normal NPS account on minor becoming an adult

104. Net tax receipts estimated at Rs 25.83 lakh crore in FY25

105. propose to reduce customs duties on gold and silver to 6% and 6.5% on platinum

Stay tuned for more updates

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