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Not Paid Income Tax in India? Here is What Could Happen, Including Penalties and Prosecution


Whether you have intentionally not paid your income tax or even if you have forgotten to pay the same, the consequences of no action will be the same. You are likely to get a notice and then the Income Tax action, including fines and even rigorous imprisonment could follow.


1) The first step: Notice Under sec 142 (1) of the Income Tax Act

Not Paid Income Tax in India? Here is What Could Happen
You are likely to get a notice, which is likely to call upon documents and details from the tax authorities, and this is basically done to take a particular case under assessment. By serving a notice under section 142 (1), of the Income Tax, the Assessing Officer, in appropriate circumstances, may call upon the assessee:

• To furnish a return of his income or the income of any other person in respect of which he is assessable, where he has not filed his return of income within the normal time allowed or before the end of the relevant assessment year.

• To produce or cause to be produced accounts or documents which the Assessment Officer may require for the purpose of making an assessment under the Act.


• To furnish in writing any information on any point of matter including statement of the assesse.

You must take this notice seriously and all relevant information and documents should be handed over to the assessment officer.

2) Prosecution

You could also face prosecution, be fined and imprisoned up to 7 years. Once you get the notice you should take it seriously and sit with your assessing officer and explain to him the reason for not filing income tax returns. The Prosecution can take place Under Section 276CC, which as mentioned earlier can be harsh and include imprisonment.

3) Carry forward losses not allowed

If you have delayed filing income tax returns, then you cannot carry forward losses to the next year. Let's say that you have bought and sold shares and incurred a loss of Rs 25,000 on the transaction. You can now set-off these losses against the profit made in the next year. But, if you have delayed your tax returns or have not filed the same, you cannot claim this benefit and will have to pay a capital gains on the profits made.

4) Attract Penalty

If you have delayed filing your Income Tax returns there is likely to be a penalty that is levied of Rs 5000. So, be prepared to pay the same.

Story first published: Tuesday, November 4, 2014, 10:45 [IST]
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