What happens if you don't file your ITR by 31 December, 2021?

The deadline for filing the Income Tax Return (ITR) for the financial year 2020-2021, i.e. the assessment year 2021-2022

What happens if you miss the deadline?

If you miss the extended due date of December 31, 2021, you can still submit your current ITR by March 31, 2022, but you will lose your right to carry over any losses from the current year that cannot be offset against the current year's revenue. So, if you have losses under the headings of business income, capital gains, or losses exceeding two lakhs rupees under the house property heading during the current year that you would otherwise be able to carry forward for set-off in subsequent years, you won't be able to do so if you miss the deadline of December 31, 2021.

If the taxes paid by you or on your behalf exceed your tax due, and you are entitled to a refund for the excess taxes paid, you forfeit your claim to interest on the excess taxes paid for the period of delay attributable to you. If the taxes paid by you or on your behalf are less than your total tax liability, you will be required to pay interest on the shortfall as well as interest for the time you took to file your ITR, even if you paid the deficit after March 31, 2021.

What is the penalty for filing your ITR after the deadline?

In addition to the aforementioned repercussions, if you file your ITR beyond the due date and your taxable income exceeds five lakhs, you will be required to pay a flat late charge of five thousand rupees at the time of filing. If the taxable income is less than Rs. five lakhs, the late fee is limited to Rs. 1,000/-.

So, if you're compelled to file your ITR for any reason, even though you don't owe any taxes, you'll have to pay a one-thousand-rupee late fee. This can happen if your gross total income exceeds the basic exemption ceiling but does not exceed five lakhs, and no tax is required due to the refund provided under Section 87A. This can also happen if you need to file an ITR because you own assets outside of India, are a signatory to an account outside of India, or have spent more than the prescribed threshold limit on energy or overseas travel.

What happens if you fail to submit your ITR even by the last date?

If you fail to file your ITR by the extended due date, which is March 31, 2022, the income tax department can levy a minimum penalty of up to 50% of the tax that you could have avoided by not filing the ITR, in addition to your income tax and interest liability until the date you file your ITR in response to the tax department's notices.

The government has powers to launch prosecution against you and put you behind bars if you do not file your ITR by the due date. The present income tax laws prescribe a minimum sentence of three years of imprisonment and a maximum of seven years.