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Analyzing the Impact of Delay in Filing ITRs

Analyzing the Impact of Delay in Filing ITRs

The income tax laws have been framed by the Indian government, which governs the taxes that is liable to be paid by the persons who are individuals, HUFs, Firms, Companies, LLP, Association of Persons, Body of individuals and other juridical people. Every individual qualifying as resident of India must pay tax on the taxable income. Taxpayers must file ITR every financial year as per the rules laid down by the Income Tax Department. In this article, we assess the impact of delay in filing ITRs.

What is ITR?

ITR or Income Tax Return refers to a form wherein information regarding the income and tax of ITR filers is submitted to the Income Tax Department. The tax liability of a taxpayer is computed according to the income earned by the taxpayer. According to the laws, if your income falls in the bracket of taxable income, then it is mandatory to file ITR. The income tax rate is decided for taxpayers in advance, and then the taxpayer files the return. Note that in case of delay in filing ITR, late filing fees shall apply.

Due date for Filing ITR for AY 2021-22

The CBDT extended timelines for filing the ITR and filing audit reports for AY 2021-22:

Filing ITR by those taxpayers who are not covered under auditDecember 31. 2021
Filing ITR for tax audit casesFebruary 15, 2022
Filing ITR for transfer pricingFebruary 28, 2022
Filing ITR of belated/revised return for FY 2020-21  March 31, 2022
Furnishing audit report  January 15, 2022
Furnishing audit report for transfer pricing casesJanuary 31, 2022

What would be the impact of delay in filing ITRs?

Section 234F of the Income Tax Act was introduced in 2017, and the provisions of Section 234F becomes applicable in case of the following:

  • If the assessee fails to file ITR according to the provisions of Section 139;
  • If the assessee delays filing of ITR on or before the respective due dates.

If the ITR is filed post the deadline, then the provision of Section 234F shall apply to categories of persons such as individuals, HUFs, Firms, Companies, LLP, Association of Persons, Body of individuals etc. This section introduced the concept of late fee aimed at ensuring timely filing of returns.

Impact of delay in filing ITRs: Late fee payable under Section 234F of the Income Tax Act

The maximum penalty under this section is 10000 rupees, and in case where the taxpayer files the ITR after the due date but before December 31, penalty of 5000 rupees would be levied.

In case of return filed after December 31 of the relevant assessment year, then maximum penalty will be levied of 10000 rupees. Note that there has been a relief for small taxpayers wherein if the total income is not more than 5 lakh rupees, then the maximum penalty levied for delay would be 1000 rupees.

Moreover, apart from the late filing fees specified above, the assessee may face some other consequences of filing delayed returns:

  • The assessee would be unable to set-off losses;
  • Interest would be levied on delayed filing;
  • Delayed refunds (if applicable).

Let’s now understand these consequences one by one.

The Assessee would be unable to set-off losses-

The losses incurred are not permitted to be carried forward to subsequent years except otherwise in case of house property loss. In case where the return hasn’t been filed within the deadline, one will not be able to set off these losses against future gains. Please note that in case of losses incurred under house property, carry forward of losses is allowed.

Interest would be levied on delayed filing-

Apart from the penalty, interest will also be charged under Section 234A[1]. Further, please note that ITR cannot be filed unless the taxes are paid. Moreover, the interest calculation shall commence from the date immediately after the due date. Hence the longer you delay, the more you have to pay.

Delayed Refunds

If refunds are applicable for excess taxes paid, then ensure filing your return on time to receive your refund as soon as possible. If you delay in filing ITR, then refunds will also be delayed.

Benefits on filing timely ITR

A taxpayer can enjoy the following benefits on filing timely ITR:

Benefits on filing timely ITR
  • Easy loan approval;
  • Get tax refund;
  • Serves as the income and address proof;
  • Avoid paying penalties and interests;
  • Carry forward your losses;
  • Quick visa processing.


So the fact of the matter is- avoid delay in filing ITR. You can not only avoid paying late fee but also reap benefits. There are lots of benefits in filing your ITR on time. In case you find any difficulty in filing your ITR, then you are advised to consult a tax professional without any delay.

Read our article:A Brief on Advance Tax Payment, Liability and its related Rules

Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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