Financial:

• Penalties: The Income Tax Act imposes penalties for various defaults, including late filing of returns, underpayment of tax, and non-payment of tax deducted at source (TDS). These penalties can range from a flat fee to a percentage of the unpaid tax, and can significantly increase your tax liability.
• Interest: You will be liable to pay simple interestincome tax at 1% per month on the outstanding tax amount from the due date of payment. This can quickly add up and further increase your financial burden.
• Collection of tax: The tax income taxauthorities can take various measures to collect outstanding tax, such as attaching your bank accounts, seizing your property, and even initiating legal proceedings.
• Damage to credit score: Defaulted tax paymentsincome tax can negatively impact your credit score, making it difficult to obtain loans, credit cards, and other financial products in the future.

Legal:

• Prosecution: In some cases, income tax defaults can lead to criminal prosecution, resulting in fines and even imprisonment.
• Travel restrictions: The tax authorities may restrict your travel if income taxyou have outstanding tax liabilities.
• Denial of government benefits: You mayincome tax be denied certain government benefits, such as subsidies and licenses, if you have defaulted on your taxes.

Other consequences:

• Damage to reputation: Defaulting on yourincome tax taxes can damage your reputation and credibility.
• Difficulty obtaining employment: Some employers income taxmay be reluctant to hire individuals with a history of tax defaults.

Here are some specific examples of the consequences of defaulting under income tax:

• Late filing of return: Penalty of Rs. 5,000 (up to Rs. 10,000 for certain cases)
• Underpayment of tax: Penalty of 50% of the underpaid tax
• Non-payment of TDS: Penalty of 100% of the deducted tax
• Failure to file TDS/TCS return: Minimum penalty of Rs. 10,000, up to Rs. 1,00,000

It is important to note that theseincome tax are just general consequences, and the specific penalties and legal repercussions may vary depending on the nature and severity of the default.

Here are some steps you can take to avoid defaulting under income tax:

• File your income tax returns on time.
• Pay your taxes on time.
• Keep accurate records of your income and expenses.
• Seek professional help if you are unsure about your tax obligations.
• If you are unable to pay your taxes due to financial hardship, contact the tax authorities to discuss a payment plan.