The deadline for filing ITR for the AY 2022-23 is at our doors. Filing of ITR within its deadline has several benefits like:

i) Claim for refund,

ii) Hassle-free loan availability,

iii) Visa approval, and so on.

However, if not filed within the deadline, it can reap many adverse consequences. Some of the consequences of non-filing of ITR are as follows:

i) Penalty

Both late filing and non-filing of ITR attract a penalty.

The penalty is subject to the annual income of the assessee and the amount of delay in case of late filing of ITR. 

ii) Interest

Unpaid taxes attract 1% interest per month or part thereof until taxes are paid.

Section 234A of the Income Tax Act, 1961 governs the provisions related to interest on account of non-filing of ITR.

iii) Non-Carry Forward of Losses

Non-filing of ITR snatches away the provision of reporting carry forward losses available to the assessee.

However, loss under the head ‘income from house property’ can still be carried forward.

iv) Best Judgment Assessment

The Assessing Officer is bound to conduct the best judgment assessment when the assessee does not file ITR, belated ITR, or revised ITR.

Best Judgment Assessment is also conducted when there is non-compliance with a notice issued by the Income Tax Department.  

v) Claim of Refund

If the tax payable is not more than the TDS deducted already, you can claim a refund of such excess TDS.

However, non-filing of ITR also takes away the provision of the claim of refund.

vi) Penalty for concealment of income

Excessive penalty is levied when the assessee even after earning more than the exemption limit, fails to file the ITR.

Such penalty is levied on the ground of concealment of income. It is not for those whose annual income is less than the exemption limit.

vii) Prosecution for failure

Non-filing of ITR allows the authorities to prosecute you under section 276CC of the Income Tax Act, 1961.

The prosecution for failure to file ITR might result in imprisonment of up to seven years or a fine.

Conclusion

While the filing of ITR has several benefits, the non-filing of ITR has adverse consequences too.

Some of the consequences for non-filing of ITR are:

i) Penalty, 

ii) Interest,

iii) Non-Carry Forward of Losses,

iv) Best Judgment Assessment,

v) Claim of refund,

vi) Penalty for concealment of income, and

vii) Prosecution for failure.