Missing the due date or failing to file altogether can have far-fetched consequences, including losing certain tax benefits also.
ITR filing FY 2025-26: For individuals who have still not filed their income tax return for AY 2026-27 – the clock is ticking as the July 31, 2026 deadline approaches. Those with professional or business income have more time – August 31, 2026 is the deadline for non-audit cases and October 31, 2026 for others.Many individuals are unsure about whether they are required to file their income tax return or not at a particular income level. An income tax return needs to be filed if your taxable income is more than the basic exemption limit. Under the new income tax regime, income up to Rs 4 lakh is exempt, and for the old income tax regime this limit is Rs 2.5 lakh. Taxable income above this limit requires a tax return to be filed even if you have to do it only to claim the Section 87A rebate. Filing can also become mandatory if certain other specified conditions are met, such as having electricity expenses of Rs 1 lakh or more, spending over Rs 2 lakh on foreign travel etc. “It is advisable to ensure continuity in filing of the ITR as beyond tax compliance, ITRs serve as an important income proof for loans, visa applications etc. Moreover, in case of overseas employment, such ITR is required to claim foreign tax credits in the overseas country, with respect to any double taxation of income as per the provisions of the relevant tax treaty,” says Chander Talreja, Partner, Vialto Partners.Also Read | ITR filing: How to claim HRA exemption when filing income tax return – top points to keep in mindBut what happens if you miss the July 31, 2026 deadline – will you face penalties, get tax notices? Let’s take a look:
What happens if the July 31 deadline is missed? Check penalty
Chander Talreja of Vialto Partners explains that missing the due date or failing to file altogether can have far-fetched consequences, including losing certain tax benefits also. For example, you cannot carry forward losses (other than house property loss) to subsequent years Also, you will not have the flexibility to switch between the tax regimes (old/ new), if required later. This is because the new income tax regime is the default tax regime and returns filed after the due date are automatically done under the new regime.“You can always file a belated return within 9 months following the close of the tax year, (i.e. by December 31, 2026, for tax year 2025-26), subject to a late fee of up to Rs 5,000 (Rs 1,000 where income does not exceed Rs 5 lakh). However, penal interest for late filing @ 1% per month is payable on any outstanding tax from the original due date until the date of actual filing, in addition to, interest on defaults in payment of advance tax continuing to accrue,” Chander Talreja explains.Also Read | ITR filing: Which is the correct tax return form for you? ITR-1 to ITR-7 eligibility explainedHe adds that the Finance Act 2026 provided more flexibility wherein you can revise any original or belated filed ITR within 12 months following the close of the tax year (i.e. by March 31, 2027, for tax year 2025-26) on a fee payment of Rs 5,000/ Rs 1,000 as applicable. If you miss to even file a belated ITR or wish to update the ITR filed earlier, you still have a window to file an Updated ITR (ITR-U) on payment of penal additional tax, as below.
Such an updated return can be filed to reduce the losses claimed earlier but not to claim any refund.Also Read | ITR filing FY 2025-26: Old vs new income tax regime – how salaried taxpayers can lower tax outgo
What happens if you don’t file ITR?
Chander Talreja tells TOI that while late filing of ITR has the above consequences, if you do not file ITR where required under the law, it can have wider ramifications. He lists some of these:
- The tax authorities may send you communications seeking reasons for non-filing, especially where high-value financial transactions are reported through Form 26AS/AIS.
- You may also forfeit refunds arising from excess tax deducted at source (TDS).
- Even if no tax return is filed, the tax authorities may reopen past years to assess any income that was not taxed, subject to the prescribed time limits.
- In addition, if the taxpayer continues to be non-compliant despite being given sufficient opportunities, the authorities may complete a best judgment assessment based on available information.
- Any wilful failure to file an ITR may also trigger prosecution, with rigorous imprisonment ranging from a term up to 6 months to 2 years along with a fine, depending upon tax evaded amount. However, no such prosecution if a belated return is filed or if total outstanding net tax payable does not exceed Rs 10,000.
“Resident individuals holding foreign assets, including shares received under global equity plans, are required to file an ITR even if they have no taxable income. Failure to do so attracts stringent penal consequences under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, apart from the above consequences,” he says.
