TDS deducted but you haven't filed your ITR yet? Here's what happens if you miss the July 31 deadline

TDS is deducted when you engage in certain transactions like selling a property, trading virtual digital assets, or making fixed deposit (FD) investment over a certain limit. When TDS is deducted, you have to file your income tax return (ITR) and either report the corresponding income for tax or request a tax refund. If you ignore it, the tax department might choose to take action against you.

If your total income is below Rs 2.5 lakh, you can claim this TDS amount back as a tax refund, but for that you need to file the ITR. If you're due a tax refund but haven't filed your ITR, it is unlikely that the tax department will take any action against you, but you are going to leave money on the table.

On the flip side, if you owe taxes and haven't filed your ITR or paid your taxes, the tax department then can take action against you like sending a tax notice and starting proceedings.


The deadline for students, salaried, pensioners and other taxpayers who don't need to undergo a tax audit to file their ITR is July 31, 2026.

How to pick the right ITR form – Here’s the guide

What happens if TDS is deducted, you paid the tax yet missed the ITR filing due date of July 31, 2026 for AY 2026-2027?

Punit Agarwal, Founder & CEO at KoinX, explained to ET Wealth Online that paying tax and filing an income tax return are two separate obligations under the law.

Agarwal says: "If your income crosses the filing threshold, you're required to file an ITR regardless of whether tax was already deducted or paid."

Simply paying tax doesn't create a record with the Income Tax Department the way a filed return does. Agarwal says that without an income tax return, there's no formal declaration matching your TDS credits, your income, or your VDA transactions, and that mismatch triggers automated notices.

Agarwal says: "Paying tax without filing is functionally the same as not filing at all in the eyes of the tax department."

Also read: Employee wrongly declared Rs 14 lakh Australian salary in Indian ITR: ITAT grants tax relief but denies Rs 3.4 lakh foreign tax credit

Karan Sachdev, Chambers of Sachdev & Jain, says that the obligation to file an ITR is independent of the obligation to pay the taxes. Simply paying the tax does not discharge the obligation to file ITR. These are two separate requirements under the law.

Sachdev says: "Section 234F fee applies irrespective of whether tax has been paid."

Further, Sachdev says that there is also a risk of penalty under Section 270A which applies for under-reporting and is applicable on difference between assessed income and returned income/maximum amount not chargeable to tax.

Also read: Rs 17.41 lakh penalty for ITR filing mistake: CA firm's owner's affidavit helps taxpayer get relief in ITAT Mumbai; know how

What are some other consequences of not filing ITR

Missing the ITR deadline doesn't mean you've lost your only chance to file, but it does cost you.

Agarwal says: "You can still file a belated return under Section 139(4), but you will pay interest under Section 234A on any outstanding tax, plus a late filing fee under Section 234F, up to Rs 5,000 if your total income exceeds Rs 5 lakh."

For crypto investors specifically, Agarwal the higher cost is often invisible: you lose the right to carry forward any losses to offset future gains. Since crypto losses can't offset gains within the same year either, missing the window to report them properly compounds the problem.

There's also the compliance angle. Agarwal says: "Non-filing of ITR when there's an obligation to file, especially with VDA income already visible to the Income Tax Department through exchange reporting, increases the chance of receiving a notice."

If someone has income less than Rs 2.5 lakh, but it is mostly from VDA selling and trading, do they still need to file ITR?

Sachdev says that Section 115BBH levies tax at a flat rate of 30% (plus cess and surcharge) on Virtual Digital Asset (VDA), irrespective of the quantum of income.

Sachdev points out that unlike Sections 111A and 112A, which contain a proviso letting a resident set the unexhausted basic exemption limit against special-rate income, Section 115BBH has no such proviso.

Sachdev says: "Thus, income tax on transfer of VDA is payable even if the gains are less than the basic exemption limit and even if there is no other income."