31 Jan 2023Like resident Indians, it is important for NRI as well as OCI and PIO cardholders to file their income tax return in India. Non-filing of ITR may result in several penalties and lots of inconveniences.
Here we describes some consequences of non-filing of income tax return/ delayed filing that NRIs /PIO’s /OCI’s may face:
Levy of interest: Non filing of ITR attracts an interest @ 1% per month of the tax liability u/s 234A of the Income Tax Act, 1961.
Penalty: If ITR is not filed by the due date, a late fee starting from Rs.1, 000 up to a maximum of Rs.10, 000 can be levied under section 234F of the Act.
Income tax and scrutiny notices: IT Department gets information regarding major financial transactions such as property transactions, remittances, bank deposits, credit card transactions, Share trading etc. from various sources. if an individual doesn’t file the ITR by the due date, he/she may be served some income tax notices from IT Department through IT Department Compliance Cell and even Income Tax Scrutiny Notice in some cases.
Follow-ups from IT Department: Once the Income Tax Department comes to know about the non-filing of ITR by the due date, the assessee will start receiving reminders via emails, SMS, post, etc. Your information will be recorded in the list of defaulter/ non-compliant assessee.
Losses can’t be carried forward: If the assessee has incurred some losses during the year, such losses can’ be carried forward to the next year to set off against profits in the coming years. But if you fail to file the ITR by the due date, you lose the right of carrying forward losses.
Black Money Act: As per the newly passed Black Money Bill (regarding foreign undisclosed assets and income), it is very important for resident assesses, who have foreign sources of income and/ or assets, to file an ITR. Non-ITR filing or non-disclosure of income may attract the harshest penal provisions of the Act.
Refund Claim: In many cases, NRIs face Tax deduction even on small interest income from bank on their NRO accounts. They can claim refund only on filing ITR within the due date. Hence Non filing of ITR can cause loss of Refund.
Importance of tax return in the documentation: ITR is a very important document for procedures with various authorities, such as for the purpose of loan application, Visa application etc. Non-filing