Not filing ITR? You can lose 3 big benefits and invite 5 penalties in 2026

What if someone totally fails to file ITR in 2026? In such a situation, there can be consequences like denial of tax deductions and exemptions, restriction on carry forward of losses, levy of interest penalties, and even possible prosecution. In total, there could be loss of three big benefits and five penalties (including charges) of not filing ITR before the due date.

Loss of benefits

Taxpayers can lose the following three benefits by not filing ITR before the due date, according to the Income Tax Department's website.

In case of not filing ITR, the individual taxpayers can lose deductions under Part C of Chapter VI-A (e.g., Sections 80-IA, 80-IAC , 80-IB , etc.) and exemptions under Sections 10A, 10AA, and 10B. These deductions and exemptions are disallowed if the return is not filed on or before the due date.

Political parties can lose exemption under Section 13A. Registered trusts under Sections 12AA or 12AB can lose exemptions by not filing returns on or before the due date.

You cannot carry forward business losses, speculation losses, capital losses, and losses under "Other Sources" if you are not filing returns on time. However, losses under the head "House Property" may still be carried forward even if returns are filed late.

Income-tax refund claims cannot be made without filing an ITR. Further, you become eligible for interest on refund from April by filing return before the due date.

However, the Interest on tax refunds is calculated from the actual date of filing, not April 1 of the assessment year, if filed late. Therefore, it is important to file return on time.

Penalties and charges

Not filing ITR can lead to the following five penalties, according to the tax department's website:

2. The tax department says that institutions required to file returns under Sections 139(4A) or 139(4C) may face penalties under Section 272A for failure to file returns.