No Tax, No Problem? Think Again Before Skipping Your ITR 2025

Tax filing season is here and it is mandatory for taxpayers to file their income tax, according to the Income Tax Act and failure to do so can attract hefty penalties and one could also face a hard time getting a loan, visa approval, etc.

Conversely, the timely filing of your Income Tax Return (ITR) opens the door to various advantages.

Consequences Of Not Filing ITR

Here are some of the consequences that taxpayers may have to face if they fail to file ITR:

Penalty Charges: If you do not file ITR you will have to pay a penalty. Under the Section 234F, if you fail to file your ITR within the due date, a late fee of Rs 5,000 will be applicable. In case your annual income is less than Rs 5 lakh, the late fees would be limited to Rs 1,000.

But if your gross income is less than the basic exemption limit, you will not be required to pay any penalty.

No Carry Forward Of Losses: In a situation wherein you have incurred losses in your investment, you can use them to offset against next year's income. Consequently, it will reduce your tax liability in the next financial year. To carry forward and set-off losses, it is mandatory to declare them in your ITR before the deadline. If you file your tax return late, you will not be able to carry forward and set-off these losses against future profits. Although, you can carry forward the losses relating to house property.

Interest On Tax Amount: According to Section 234A, if you don't pay your taxes on time, you will be liable to pay an interest of 1% per month on the outstanding tax amount. This interest is calculated from the date you file your return for the relevant financial year till the due date.

For instance, if you owe Rs 2 lakh in taxes for the financial year 2024-2025. The deadline to file your tax return for non-audit cases is 15th September 2025, but you end up paying it in December 2025, which is three months later. In this case, you will be charged Rs. 6,000 as interest (2 lakhs × 3%). This interest amount of Rs 6,ooo is going to get added to your tax liability.

Prosecution: If your tax liability is more than Rs 25,000, you can also be punished with rigorous imprisonment for a minimum of 6 months up to 7 years and with a fine.

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