What Happens If You Miss or Misfile Your ITR? Penalties, Fines & Legal Risks Explained

Key Highlights

• Late ITR filing can attract penalties up to ₹5,000 under Section 234F
• Wrong ITR forms or misreporting income may result in 50%–200 % fines
• Non-filing could lead to prosecution with up to 7 years imprisonment
• Updated Returns offer a chance to correct past filing lapses within 2 years
• Defence personnel can rely on udChalo’s Tax Services for easy, penalty-free filing

Income Tax Return (ITR) filing isn’t just an annual routine—it’s a legal obligation. Whether you are a salaried professional, self-employed, or a pensioner, missing the ITR deadline or filing it incorrectly can lead to more than just a minor inconvenience. From financial penalties to legal consequences, the aftermath of late or incorrect filing can be serious. This blog explores all the penalties, interest charges, and legal outcomes you could face if you ignore your ITR responsibilities for AY 2025–26.

Penalty for Late Filing of ITR (Section 234F)
Failing to meet the ITR deadline can result in a penalty under Section 234F of the Income Tax Act. The applicable penalty depends on your income:

• Income above ₹5 lakh: Penalty of ₹5,000
• Income below ₹5 lakh: Penalty of ₹1,000

Apart from the fine, filing late means:

• You may lose the benefit of carrying forward losses (except for house property losses)
• Delays in receiving your refund
• Increased risk of receiving IT notices

Interest Charges for Delayed Tax Payment (Sections 234A, 234B, 234C)
Late payment or short payment of tax dues leads to interest charges:

• Section 234A: Interest@1% per month for delay in filing return post due date
• Section 234B: Interest@1% per month for failure to pay advance tax (if tax liability exceeds ₹10,000)
• Section 234C: Interest for deferment in paying instalments of advance tax

Example: If your outstanding tax is ₹50,000 and you file two months late, interest = ₹50,000 x 1% x 2 = ₹1,000 (under 234A).

Legal Consequences: Non-Filing of ITR (Section 276CC)
If you skip entirely filing your ITR and your tax liability exceeds ₹10,000, you may face prosecution under Section 276CC:

• Imprisonment from 3 months to 2 years (extendable to 7 years for serious cases)
• Accompanied by a monetary fine

While rare, the Income Tax Department has initiated legal action in some high-value cases of willful non-compliance.

Penalty for Incorrect ITR Filing

Filing the wrong form or furnishing inaccurate details can have significant consequences:

• Defective Return (Section 139(9)): Return may be invalid unless corrected within a stipulated time
• Underreporting (Section 270A): 50% of tax underreported
• Misreporting (Section 270A): 200% of tax was misreported

Example: If you earned freelance income but failed to declare it, you could be fined up to 200% of the tax on that income.

Consequences of Filing but Not Verifying ITR
Even if you file your ITR correctly, failing to verify it (via Aadhaar OTP, net banking, or physical form) makes it legally invalid.

• Return will be treated as not filed at all
• All applicable late fees and penalties become due
• Refund will not be processed

You must verify within 30 days of filing to complete the return.

Missed Filings in Previous Years: What to Do Now
If you have skipped ITR filing in previous years, you can now file an Updated Return under Section 139(8A):

• Allowed within 2 years from the end of the relevant AY
• Applicable penalties range from 25% to 50% of the additional tax and interest

Updated returns help you avoid legal scrutiny and make voluntary disclosures.

Penalty for False Deductions or Fake Documents
Submitting false rent receipts, insurance premiums, or investment proofs can attract strict penalties:

• Penalty under Section 270A or 271J
• In severe cases, prosecution for wilful fraud

CAs or tax preparers involved in such fraud may also be penalised.

How Defence Personnel & Veterans Are Impacted
Defence personnel are often deployed in remote or high-security zones with limited access to tax consultants. Similarly, veterans may lack awareness about digital filing or deduction claims.

• The ITR delay penalties and non-filing consequences affect them despite their service conditions
• Refund delays or invalid filings can affect pension planning and financial benefits

udChalo’s Tax Services provides dedicated support for defence personnel and veterans to ensure timely, accurate, and compliant filing.

Additional Consequences for Retired Army & Active Defence Personnel

For Retired Defence Veterans:

• Missed ITR filings can result in pension-related complications if refunds are delayed or deductions are not claimed.
• They may face difficulties in claiming benefits, such as medical reimbursements or housing subsidies, if their financial documents are not up to date.

For Active Soldiers:

• Deployment in remote zones with limited digital access increases the likelihood of missing deadlines.
• Incorrect filing can affect financial planning, especially for EMIs, education expenses, or insurance premiums.

udChalo’s veteran-first approach ensures these heroes are not penalised due to systemic limitations.

Penalties and Consequences at a Glance

Avoid Penalties—File Smart, File Right
Missing or misfiling your ITR isn't a minor mistake—it can result in hefty penalties, interest charges, and even legal action. For defence personnel and veterans, especially, these consequences can be avoided with timely and guided support.

Whether you are on duty or enjoying retirement, tax filing shouldn’t be stressful. Explore udChalo’s Tax Services to simplify your tax journey with trusted, defence-first expertise.

FAQs

1. What is the penalty for filing ITR after the due date?
   You may be charged ₹1,000–₹5,000 depending on your income bracket.
2. Can I be jailed for not filing my income tax return (ITR)?
   Yes, in serious cases where tax liability exceeds ₹10,000, imprisonment up to 7 years is possible.
3. Is there a way to file a missed return from a previous year?
   Yes, through an Updated Return under Section 139(8A) within 2 years.
4. What if I file the ITR but forget to verify it?
   Your return is considered invalid, and you may incur late fees and be denied a refund.
5. What happens if I underreport or misreport my income?
   You can be fined 50%–200% of the tax amount, depending on the intent.
6. Do defence personnel have exemptions for late filing?
   No exemptions, but dedicated services like udChalo help ensure timely filing.
7. Is there a penalty for filing using the wrong ITR form?
   Yes, your return may be marked defective and could be rejected.
8. What if I submitted fake investment proofs?
   Heavy penalties and legal action may follow, including against your CA.
9. Can interest be charged even after paying tax before the deadline?
   Yes, if advance tax was not paid in time, interest under 234B/C applies.
10. How does udChalo help defence veterans with tax filing?
    udChalo offers tailored tax services with expert help for timely, accurate, and hassle-free filing.