We all dread it, but there is no way to get away from filing your taxes. In fact, there is an old saying that nothing is certain apart from death and taxes. Now, having said that, the last day to file your Income Tax Return for the fiscal year 2018-2019 is 31 August, 2019. Not filing your taxes on time affects you in many ways. There are several consequences for not filing your taxes on time, and subsequently various inconveniences caused. Here are the implications of not filing your taxes on time,

• Penalty for late filing of Income Tax Return
• Reduced time for revising errors
• Payment of interest on tax remaining unpaid
• Consequences on carrying forward losses
• Delay in receiving returns

• Penalty for late filing of Income Tax Return: 

The changed rules notified under section 234F of the Income Tax Act that came into effect starting 1 April 2017. In line with this, you can be liable to pay a penalty of up to INR 10,000 for filing your ITR post the deadline. This can be broken up further based on your annual income and the timeline for the delay. Filing your returns between 1 September – 31 December 2019 will require you to pay a fine of INR 1,000 if your annual income is less than INR 5,00,000 and INR 5,000 if it exceeds the same. Any further delay would require you to pay a fine of INR 10,000 if your annual income exceeds INR 5,00,000. 

• Reduced time for revising errors: 

Previously, taxpayers had a two year window in which they could rectify any errors in their ITR submission. However, now this has been decreased to one year from the end of the financial year. In this sense, for the fiscal year 2018-2019, you will be allowed to make revisions only until the end of March 2020. Any delays in filing your taxes will reduce the timeframe available to you for making any corrections. 

• Payment of interest on tax remaining unpaid: 

If you fail to file your ITR on time or before the due date, you will have to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax that remains unpaid. This is detailed in section 234A. Calculation of interest will come into effect immediately after the due date – August 31, 2019 for the fiscal year 2018-2019. So the longer your delay, the more you will end up having to pay. 

• Consequences on carrying forward losses: 

If you do not file your returns on time, you will not be allowed to carry forward losses to the next year. These could be losses suffered in the sale of capital gains or that which is incurred in the course of business. This will hinder you from offsetting your income in the subsequent years.

• Delay in receiving returns: 

In case you are entitled to receive a refund from the government for excess taxes you have paid, the timeliness of your refund is contingent on the promptness with which you make your ITR submission. Put simply, filing your taxes late means that you will have to wait longer to see any refunds. 

Another important point to note is that the taxes you pay are essential to sustaining the functioning of the government. In this sense failure to pay your taxes on time affects the optimal functioning of the bureaucracy. This can in turn affect both the state and central government’s capacity to protect some of your basic needs. Many times, people tend to overlook this extremely significant point. 

So don’t wait any longer if you haven’t filed your taxes yet, and get on it right away. In the future, always ensure that your taxes are filed on or before the due date to avoid any serious consequences and inconveniences.