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Why should you file your income tax returns on time?

Consequences of Late Filing of Income Tax Return



Dear reader, we know that last date for filing income tax returns for individuals for Assessment year 2016-17 was 31st July 2016. Considering the day long strike at public sector bank, income tax department has extended the deadline to 5th August.

Now, the last date for filing ITR for individual is 5th Aug 2016. So, it’s good news for those who missed the original deadline (31st July) to file their tax returns.


Those who couldn’t plan or manage to file on or before earlier due date, can now, e-file their ITR till 5th August.

Filing of ITR on time i.e., on or before due date is necessary. Here, I will let you know, why you should file your tax returns on time.

You may face some adverse consequences in the form of penal interest or assessment notice form income tax department or may be deprived of many benefits by not filing your tax return on time.

Below are the few consequences and disadvantages for late filing of Income Tax return:



No Carry Forward of Losses

No carry forward of losses would be allowed, if you file your income tax return after the due date of filing.

As per existing income tax law in India, if you have a Business loss or loss under the head “Capital gain”, you can carry forward the loss only if file your income tax return on or before the due date.

Thus you cannot carry forward following losses in case of late filing of income tax return:

  • Loss from business & profession
  • Speculation business loss
  • Long term capital loss
  • Short term capital loss
  • Loss from owning & maintain horse races

Loss of Interest on Refund

Normally, interest on refund is allowed for a period commencing from the 1st day of April of the assessment year to the date on which the refund is granted.

(Currently rate of interest on refund is 6% p.a or .05% per month)


In case of belated return (return filed after due date), interest on refund would be allowed from the actual date of filing the return till the date when refund is granted.


Thus, a taxpayer who filed his tax return after due date will not be allowed interest on refund (if any) for the period of delay in filing income tax return. In such case he would be allowed interest from the date of filing belated return to the date on which refund is granted.

Revision of Belated Return Not Possible

Revision of income tax return not allowed in case of late filing of return i.e., belated return.

If you file your tax return after the due date of filing income tax return, you cannot file a revised return later in case you find any mistake or error in originally filed return.

What is Belated Return?

If, the income tax return is not filed on or before due date, belated return under section 139(4) of the income tax act, can be filed at any time before the expiry of one year from the end of relevant assessment year.


Imposition of Interest under Section 234A

As per the provisions of Income Tax Act, 1961, interest under section 234A is levied or imposed by income tax department for default (late) in filing of income tax return.

If you have unpaid taxes that are outstanding to income tax department and you have not filed your tax return on or before due date, you will be charged with section 234A.

You will be charged an interest (simple interest) at 1% per month or part of the month on the amount of outstanding tax.

Interest will be computed from the due date applicable to you till the date of actual filing of return.

Penalty under Section 271F

Apart from penal interest, there are other implications & consequences for late filing of tax returns.

Belated return under section 139(4), for financial year 2015-16, can be filed at any time before the expiry of one year from the end of relevant assessment year (AY 2016-17) i.e., any time before 31st March 2018.

However, in such cases income tax officer (AO) may levy a penalty of Rs. 5000 under section 271F.

Note: Normally penalty under section 271F is not levied in all cases and depend on at the sole discretion of income tax officer (AO).

Prosecution under Section 276CC

If the income tax authorities feel or has any reasons to believe that, taxpayer willfully failed to furnish return on time, may levy penalty under section 276CC in cases where:

  1. the amount of tax, exceeds twenty five lakhs (25 lakhs)– with rigorous imprisonment for a term ranging from six months to seven years with fine,
  2. in other cases – with imprisonment for a term three months to three years with fine


Normally, these penalties are levied in a very extreme case. In most of the cases, the taxpayer is asked to pay interest @ 1% for late payment of income tax & furnishing of return of income.


So, considering the above consequences of late filing, you should avoid late filing of your return of income. This is the reason why you should file your ITR on time.

Shubham Anand

Shubham Anand is the founder of (earlier known as He is a qualified Chartered accountant, law graduate, personal finance enthusiast. He loves to write on topic related to Taxation, personal finance, Tax Planning, Money & Tax saving tips.

One thought to “Why should you file your income tax returns on time?”

  1. Awesome article. paying tax on time is a sign of a good citizen of this country. Thanks for sharing such useful article here.

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