Penalty u/s 234F of the Income Tax Act, 1961:

For returns filed after 31st July 2025, the penalty limit will be increased to Rs. 5,000 under Section 234F. However, to give relief to small taxpayers, the IT department has said that if your total income is below Rs 5 lakh, the maximum penalty levied for delay will only be Rs. 1,000.

Non-Carry Forward of Losses

Taxpayers cannot carry forward the losses if ITR is not filed within the prescribed time. However, there is an exception to the House Property under the head “Income from House Property“. Such a loss can be carried forward even if the return is not filed within the due date under Section 139(1).

Interest under Section 234A of the Income Tax Act, 1961

On failing to meet the ITR deadline, interest at 1% per month (or part thereof) will be charged from the due date till the date of filing under Section 234A.

Delayed refund

In case there is an income tax refund due, then the tax refund will be given only after the ITR is filed and verified.

Penalty for Concealment of Income

If taxpayers have not filed ITR even after having a taxable income, they might attract a penalty for concealment of income under section 270A for under-reporting and misreporting of income.

Therefore, if no return is filed and later your income is assessed above the basic exemption limit, you may face a heavy penalty and interest on the tax due.

Prosecution Under Section 276CC

If you don’t file your tax return, you will receive a tax notice of prosecution under section 276CC. This could lead to a jail sentence of 3 months to 2 years, plus a fine. If the amount of tax you owe is large, the punishment can be even more severe, with a prison term extending up to 7 years.

Best Judgment Assessment under section 144

The tax officer can make an assessment to the best of his judgment, called ‘Best Judgment Assessment’, in the following cases:

• If the taxpayer does not file a return within the due date prescribed under section 139(1) or a belated return under section 139(4) or a revised return under section 139(5).
• If the taxpayer does not follow the terms of a notice issued under section 142(1) or does not comply with the terms of a notice issued under section 142(2A).
• If the taxpayer does not follow the terms of a notice issued under section 143(2).

Filing your ITR on time is not just a legal requirement but also a smart financial habit. Delays or failure to file can lead to penalties, interest, and even prosecution in many cases. To avoid unnecessary financial burden, it’s important to stay informed and comply with tax deadlines. When in doubt, consult a tax professional to ensure you’re on the right track.