If a person does not file their income tax return for several consecutive years, they may face serious legal consequences and penalties. This deliberate negligence not only increases the penalty but can also land you in jail. As a responsible citizen, it is most important to file ITR on time and follow the rules.
Why is it important to file ITR on time
If you have not yet filed your ITR for the assessment year 2025-26, then know that its last date is 15 September 2025. This date is very important because filing returns after this may result in you paying a heavy penalty and interest.
Legal risks for not filing ITR continuously
Not filing ITR continuously can get you into many legal troubles. Below are some of the key sections of the Income Tax Act that alert you:
Section 234F
If your annual income is more than ₹5 lakh and you fail to file ITR on time, a penalty of up to ₹5,000 can be imposed. If the income is less than ₹5 lakh, the penalty is ₹1,000.
Section 234A
Late payment of tax attracts interest of 1% every month, which increases your liability continuously.
Section 276CC
Willful non-payment of tax is considered a serious offence, which can attract a jail term of three months to seven years and a hefty fine.
Financial losses and other problems
Not filing ITR not only leads to legal risks, but you also have to face many financial and practical losses:
Losses cannot be adjusted further
If you have suffered any loss in business or the stock market (such as short-term capital loss), then you cannot reduce your tax liability by adjusting it in the next years. This facility is available only if you have filed your ITR on time.
Refund will not be available
If tax (such as TDS) has already been deducted from your income, then it is necessary to file an ITR to get it back. Without filing the return, you cannot claim a tax refund, and your money can get stuck.
Problems with loans and credit cards
Banks and financial institutions consider ITR as the most reliable proof of your income. Without this, you may face a lot of difficulty in getting a personal loan or credit card.
Obstacles in visa and business registration
The ITR record has become an important document while applying for a visa for foreign travel or even for starting a new business. Without tax records, you may also face hurdles in these processes.
What is ITR-U
The government has now provided the facility to file returns for the last 4 years through ITR-U (updated return). But for this, you have to pay an additional tax and surcharge of up to 70% on the total outstanding tax. It is clear that by paying tax on time, you not only avoid a penalty but also make yourself financially strong.
