What Is ITR And What Happens If Income Tax Return Is Not Filed?

By Ektha Surana


Updated on: Jun 12th, 2024


3 min read

What is ITR And Why is it Necessary?

An income tax return(ITR) is a document that you file with the government. This return informs the government about your income, investments and the tax payable. 

ITR Filing is Mandatory in India if Any of these Conditions Apply to You:

1. If your total income in the year is more than the tax-free limit-

AgeTax-free limit
(Old Tax Regime)
Tax-free limit
(New Tax Regime)
Below 60 yearsRs 2.5 lakhRs 3.0 lakh
60 years or more but below 80 yearsRs 3.0 lakh
80 years or moreRs 5.0 lakh

2. If you want to claim an income tax refund.
3. If you have earned from or have invested in foreign assets during the FY.
4. If the taxpayer is a company or a firm, irrespective of profit or loss.
5. If you have a loss from business/profession or under capital gains head, you will only be allowed to carry them forward to the next years if you file the return before the due date.
6. If you have deposited a total of Rs 1 crore or more in one or more current accounts with a bank. However, no such restriction has been placed on deposits made in post office current accounts
7. If you have deposited more than Rs 50 lakh in your 'savings' bank accounts
8. If you have spent more than Rs 2 lakh on foreign travel, whether for yourself or any other person
9. If the yearly electricity expenditure is more than Rs 1 lakh
10. If your tax is withheld in the form of TDS/TCS is more than Rs 25,000. For a senior citizen (above 60 years), this limit is Rs 50,000.
11. Your business turnover is more than Rs 60 lakhs
12. Income from your profession is more than Rs 10 lakhs

5 Reasons Why Should You File ITR?

  • Claim Tax refunds: If you earn less than Rs 5 lakh a year, you can get back all the tax that was deducted from your income only by filing tax returns by the 31st July deadline. 
  • Legal consequences: If you don't file tax returns, the income tax department may send you a notice. You may face huge penalties and taxes if you do not file ITR, despite their reminder.
  • Carry forward of Losses: If you have losses in your business or capital gains, you can carry them forward to reduce your future tax liability by filing tax returns on time.
  • Verified income statement: Freelancers and self-employed people don't have official income statements like salaried employees do, so filing tax returns is the most reliable way to verify their income.
  • Loan and Visa application: When applying for a loan or visa, your last 3 years ITR is required. Submitting tax returns from the last few years can help lenders or embassies verify your financial status and eligibility.

What Happens if ITR is Not Filed ?

  • Late-filing fee: If you do not file ITR within the due date, you may have to pay a late-filing penalty of Rs 5,000. This penalty will be reduced to Rs 1,000 if your income is below Rs 5 lakh.
  • Interest: You may have to pay interest under Section 234A @ 1% per month or part month on the unpaid tax amount. 

How To File ITR For FY 2023-24?

  • If you get a salary, you can simply upload your Form 16, and ClearTax will prepare your return automatically and help you finish e-filing quickly.
  • If you are a freelancer or run a small business or a home-based business like a Kirana store or an e-commerce seller (Section 44AD or 44ADA), ClearTax is the easiest place to e-file your ITR-4. Our CAs can prepare and e-file your income tax return. Please have a look at our CA-assisted plans here
  • ClearTax automatically selects the correct ITR form applicable to you. We support all ITR forms – ITR-1ITR-2ITR-3ITR-4ITR-5ITR-6, and ITR-7

Which ITR To File

If you are wondering which ITR to file, take a look at this.

Frequently Asked Questions

What happens if you miss the ITR filing deadline?

If you miss the ITR filing deadline, you may face penalties, interest charges, and potential loss of benefits. It could also lead to employment suspension or termination by your employer.

What is the interest payment for missing the ITR deadline?

According to Section 234A, taxpayers who fail to file their ITR within the prescribed due dates are required to pay an interest rate of 1% per month (or part of a month) on the unpaid tax amount. The longer the delay, the higher the accumulation of interest.

What Documents do you Need to File ITR?

When you start the process of filing your income tax return, apart from your salary slips, bank savings account passbook, Aadhar card and PAN card, there are a few other documents that you will require to ease your tax filing process:

  1. Form 16: It is provided by your employer and contains details of the salary paid by them to you and the Tax deducted at source (TDS) on it.
  2. Form 16A: It contains details on TDS deducted on interest received from deposits such as fixed or recurring bank deposit.
  3. Form 16B: If you sell a property, TDS applies on the amount received from you by the buyer, the details of which are present in this form.
  4. Form 16C: TDS details of the rent paid by your tenant to you are recorded here.
  5. Form 26AS: This form represents your comprehensive statement of taxes against the PAN number. It includes TDS by your employer, bank or any other organization that has made a payment to you. Advance taxes or self-assessment taxes paid, proof of tax saving investments such as deductions as prescribed from Section 80C to 80U including life insurance policy or a term plan are also listed.
About the Author

Multitasking between pouring myself coffees and poring over the ever-changing tax laws. Here, I've authored 100+ blogs on income tax and simplified complex income tax topics like the intimidating crypto tax rules, old vs new tax regime debate, changes in debt funds taxation, budget analysis and more. Some combinations I like- tax and content, finance & startups, technology & psychology, fitness & neuroscience. Read more


Quick Summary

An income tax return(ITR) informs government about income, investments, tax payable. Filing mandatory if income over limit, refund claim, foreign assets. Benefits include tax refunds, legal compliance, carrying forward losses, verified income, aiding loan/visa applications. Non-filing incurs late fee, interest. Methods to file ITR based on income sources. Various ITR forms available based on individual circumstances.

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Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

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