What Happens If a Company Does Not File ITR?
Submission of tax returns (IR) is a legal obligation for companies in India. This ensures compliance with the tax laws, facilitates items, and allows companies to require tax profits. However, failing to enter the ITR can lead to serious financial, legal, and recognized results. Below is a broad observation of what happens if a company does not file its ITR and the negative impact of non non-filing company’s ITR. File your company’s ITR with TaxDunia.
1. Valid implication
Penalty under section 234F
A company that cannot register ITR within the due date may meet penalties by section 234F of the Income Tax Act. The penalty structure includes:
Rs. 5,000 if the return has been submitted after the due date but before December 31.
If Rs. 10,000 is submitted after December 31st. For small companies with income less than Rs. 5.00,000, fined. Limited to 1000.
2. Prosecution
In cases of intentional default, the company can meet prosecution. This penalty may range from three months to seven years in prison, which may be based on the severity of non-compliance and the amount of tax evasion.
3. Disrespect of directors
Continuous non-transport can lead to the disability of board members who hold positions in any company for five years.
Economic result
1. Interest on outstanding tax
If taxes remain unpaid due to non-submission, the interest rate is charged at an interest rate of 1% per month on the outstanding amount until the payment is made. This interest increases connections over time, increasing the economic burden.
2. Loss of reimbursement
Companies that are unable to register ITRS in time may lose the qualification to claim tax reimbursement for additional tax paid during the financial year.
3. Incapable of utilizing tax advantages
Non-submission can lead to loss of Carrie-Forward Profit for Uabsorbed Injury or Depreciation, which may otherwise reduce future tax obligations.
Operational and Iconic Impact
1. Difficulty in obtaining loans and investments
It is often necessary to archive the ITR of banks and financial institutions when evaluating loan applications or investment proposals. Non-submission can prevent access to damage and damage to the reliability of the company.
2. Impact on government contracts
Companies that are unable to register IRs can be disqualified for commercial tenders or contracts, which limits business opportunities.
3. Iconic damage
Compliance with the tax laws reflects poorly on a company’s rules and can damage its reputation among stakeholders.
Large deadline for submission of ITR
The dates that are fixed for submission of ITR depending on the type of taxpayer vary:
- Audit Required Business: October 31
- Transfer Price Report required business: November 30
Failure to complete these deadlines causes penalties and interest fees.
Is It Possible to Sue a Business for Not Filing an ITR?
Yes, a company can be prosecuted for failure to file its Income Tax Return (ITR). According to the Income Tax Act, specifically Section 276CC, prosecution can be launched if a company does not file its ITR within the due date or within the time limit as mentioned in a notice issued by the tax authorities. The individuals who are in charge of the day-to-day affairs of the company, like directors or partners, can also be prosecuted and held liable.
If the tax evasion is more than Rs. 25,000, the penalty may also consist of severe imprisonment for a period between six months and seven years with a fine. Even if huge taxes have been paid in advance tax or TDS, non-compliance with a notice issued by the tax department can also result in prosecution.
Hence, businesses need to comply with tax filing obligations promptly to escape such legal repercussions.
Steps to Avoid Non-Performing Results
1. Access
Make sure the ITR is filed before the scheduled time frame in each financial year.
2. Take professional help
Attach chartered accountants or tax advisers to manage and ensure compliance with complex submissions.
3. Pay tax before submission
To avoid additional penalties or interest, make sure all tax obligations are approved before submitting a return.
Get Started with TaxDunia
Non-filing of the ITR of a company leads to more side effects: financial punishment, legal actions, operational obstacles, and recognized risks. It is not just a matter of compliance but is also important for maintaining economic health and reliability in the market. Companies should prioritize timely archiving and take professional help if necessary to avoid these results. Reach out to TaxDunia to meet legal compliance and file your company’s ITR.
