Penalty for Late Filing of Income Tax Return for NRIs

It is a critical responsibility of every taxpayer in India to file their Income Tax Return on time. Filing it on time not only ensures tax law compliance but also helps you claim or receive refunds, thereby avoiding any legal trouble. But if you fail to do so, obligations and other legal consequences are waiting for you at the door.

This blog will discuss the late filing fee and penalty for failing to file your ITR by the due date.

What is the due date or the last date to file ITR?

The due date to file your income tax return(ITR) in India is 15 September for non-audited cases and 31 October for audited cases, unless extended by the government, for non-resident indians (NRIs), Overseas Citizens of India (OCI), and HUFs. Now that the new tax regimes have been announced, there are two tax regimes, old and new, and you can choose any one as per your suitability when filing your income tax returns.

However, ensure that the new tax regime is set as the default for ITR filing. Unless you specifically select the other tax regime, the new tax regime will be initiated by default. As mentioned above, ensure that you file your ITR before the due date of 15 September; if not, the Income Tax Act imposes penalty on individual taxpayers.

Who Should File ITR?

An individual, a Non-resident Indian, an Overseas Indian Citizenship Card Holder, or a HUF earning above 3 lakh as per the new tax regime, and is under the age of 60, is required to file an Income Tax return (ITR).

NRI Income Tax Slab Rates for AY 2025-2026 (FY 2024-2025)- New and Old Tax Regime

Please note that the surcharge of 25% to 37% is not imposed on income chargeable to tax under sections 111A, 112, 112A, and dividend income. The minimum rate or surcharge payable on such incomes is 15%, except when the income is taxable under sections 115A, 115AB, 115AC, 115ACA, and 115E.

Penalty for Non-Filing of ITR by Due Date

If you have missed the September 15 deadline, the government of India allows you to file a belated income tax return; the due date is December 31 of the same fiscal year. However, under Section 234F, filing income tax return after the deadline of July 31 makes you liable to pay a maximum fine of Rs. 5,000. However, if you are a small taxpayer with an income of less than Rs 5 lakh, the acceptable fine limit is Rs 1,000.

There is no penalty imposed for filing after the deadline if your annual income is less than the basic deduction amount.

What is a Belated Return?

If a non-resident Indian fails to file their income tax return before the deadline, they are given another deadline, which is December 31 of the same year, to file their return. This is a belated return deadline.

However, the first belated return deadline is September 30; the time frame for filing a late return remains until December 31. In a nutshell, if you file your taxes after these dates but before the end of the fiscal year, then it is known as a belated return. Yes, it may be subject to penalties and fines, as outlined in Section 139(4) of the Income Tax Act. To avoid a penalty, it is essential to file your ITRs on time.

Penalties for Belated ITR Return

As mentioned above, filing a belated income tax return can result in fines and disadvantages. Here is what happens:

Interest Penalties: Under Sections 234A, 234B, and 234C, interests will be charged, which will increase your tax liability.

Last Fees: Under Section 234F, you will be charged a late filing fee of Rs 1,000 if your income is between Rs 2.5 lakh and Rs 5 lakh. Late fees of ₹ 5,000 will be imposed if your income exceeds ₹ 5 lakh, and no fee will be charged if your gross income is less than ₹ 2.5 lakh.

Limitations on Loss Carry Forward: If you find a belated return, you aren't allowed to use any investment or company losses as a way of reducing earnings in the years to come. Another thing to note is that losses from real estate are not taxed and can be carried forward in cases of late returns as well.

No deductions and exemptions: If an Individual files their ITR on time, they are eligible for certain tax benefits under sections 10A, 10B, 80-IA, 80-IB, 80-IC, 80-ID, and 80-IE. Late filing of your ITR means you will not be eligible for any tax benefits, which will ultimately increase your tax burden.

Benefits of Filing ITR on Time

Filing ITR on time comes with endless benefits, which include:

• Easy Bank Loan Approvals: When applying for a bank loan, financial institutions and banks require a copy of your ITR as proof of your financial standing. If you file an ITR on time, you will be perceived as a responsible taxpayer in India with a stable income, which makes it easier for banks to approve your loan.
• Tax refund: As a taxpayer, if you have overpaid your taxes, you are eligible to claim a refund by filing your return on time. The sooner you file, the earlier you will receive your refund.
• Quick Visa Processing: Some countries require you to submit a copy of your ITR while applying for a visa. Now, timely filing of ITR ensures that your return is processed quickly and without any delay.
• Carryforward of losses: If you file your ITR on time or before the due date, you can set those losses from your business or profession against your income in the same or subsequent years. This will also help you reduce your tax liability.

File Your ITR On Time With Savetaxs

Filing ITR as an NRI in India can feel overwhelming. Indian tax laws can feel like an unsolved puzzle, leaving you with no clear understanding. Well, not anymore. SaveTaxs has been helping NRIs for decades in filing their ITR. Our satisfied client base of thousands of NRIs, along with our team of experts, is a testament to the quality of services we offer.

We provide NRIs with an NRI-specific ITR strategy, ensuring that we minimize your taxability. Hence, no matter where you are in the world, we work 24/7 across all times so that you can file your ITR from anywhere, at any time.

Connect with us now before the ITR deadlines hit.