It is compulsory to file an income tax return (ITR). Not filing ITR will attract penalties as well as it can also hamper your chances of getting a loan, or a visa for travel purposes or property registration. As per the Income Tax Act, the firm’s entities or firms that require the mandatory filing of ITRs in India:
- Those who want to claim an income tax refund.
- Those who are want to carry forward a loss within ahead of income.
- Residents but showing authorities in a foreign account.
- Firms or companies are independent of if you have profit or loss during the financial year.
- International companies are taking the benefits of business in India.
- People whose gross total income exceeds Rs 2.5 lakh. This limit is Rs 3 lakh for senior nationals and Rs 5 lakh for super senior citizens.
- Even NRIs (Non-resident Indian) who have income exceeding Rs. 2.5 lakh that is received in India, have to file an income tax return in India.
The issues faced when ITR is not filed
The penalty is a three-tier fee system. It has been started for not filing income tax returns before the due date. If the income tax return is filed beyond the due date, then fees payable will be Rs. 5000 else it will be Rs.10,000. The taxpayers whose annual income does not exceed Rs. 5,00,000, the payable fees would be Rs.1000
- No carry forward of losses
The taxpayer will not be enabled to carry forward any loss under the head profits and gains of business or capital gains if the ITR is not filed before the due date. Although, loss under the head “income from house property” shall be entitled to be carried forward.
- Delay in the method of return of income
After filing the income tax returns and the verification of the same is properly completed, the central processing center in Bangalore, of the Income Tax Department, processes the income tax return. It is only then that the tax liability or refund of the taxpayer is defining.
- Interest must be paid on the tax amount
When the income tax return is not filed before the due date, the interest at the rate of 1% per month is levied unless the date of filing the income tax return. The mentioned interest is payable on tax payable after reducing the TDS ( Tax Deducted at Source ), TCS (tax collected at source), advance tax and other reliefs.
Therefore, it is recommended for every taxpayer to file an income tax return on time so that we can avoid some implications regarding the levy of a mandatory fee.