The majority of us are habitual of putting off the tax filing work unless it ends up with necessity. The same is in the case of the filing of Income tax return. Non- filing of the Tax return on time simply leads to levying of heavy penalties by Income tax department. Even earlier penalty provision was there but now Income Tax comes up with the more stringent provision by insertion of new section 234F under Income Tax act 1961.
From this year onwards all of us should file Income tax returns on time to avoid paying any penalties to the government. Peoples are still confused in analyzing the penalty provision introduced in budget 2017. It has triggered various kinds of misunderstanding and rumors about the amount of Penalty to be levied as per total Income. In this article, we have tried to clarify the income tax laws on this matter. For easy to understand, we have categorized the relevant laws in the following headings.
In Budget 2017 our honorable Finance Minister, Mr. Arun Jaitley introduced a new section 234F to ensure timely filing of returns of income. As per section 234F, if a person is required to file income tax return (ITR) but does not file it on time prescribed under Income tax act then late fees have to be deposited by him while filing his ITR.
What does Law say here?
Insertion of new section 234F.
“234F. Fees for default in furnishing return of income.—
(1) Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of said section, he shall pay, by way of fee, a sum of,—
(a) five thousand rupees, if the return is furnished on or before the 31st day of December of the assessment year;
(b) ten thousand rupees in any other case:
Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.
(2) The provisions of this section shall apply in respect of the return of income required to be furnished for the assessment year commencing on or after the 1st day of April 2018.”.
Due dates for filing Income Tax return
The due dates for filing ITR u/s 139(1) for different categories of taxpayers are as under:
- Individuals who are not required to be audited – 31St July
- Company or Individuals whose accounts are required to be audited- 30th September
- Individuals who are required to furnish report referred in section 92E- 30th November
The scope of Section 234F
All persons including Individual, HUF, Company, Firm, AOP etc. will be covered under the scope of Sec 234F and will be liable to pay late filing fees, if the return is filed after their respective due dates.
Amount of Penalty
(A) For a person with total Income of more than Rs. 5,00,000.
(i) If ITR is filed on or before 31st December following the last date – Rs. 5,000
(ii) If ITR is filed after 31st December – Rs. 10,000
(B) For a person with total Income of less than Rs. 5,00,000 – Rs. 1,000
Effective Date of section 234F
The provisions of this section shall be applicable in respect of Income Tax returns to be filed for FY 2017-18 (or AY 2018-19).In simple words, if we file the return of F.Y 17-18 after 31st July 2018 then fees u/s 234F shall become operative.
Penalty Provision before Insertion of Section 234F
Before the introduction of sec 234F, the penalty for failure to furnish the return of income was leviable under section 271F.
As per this section, if the return is not filed before the end of relevant assessment year then Assessing Officer, at its discretion may levy a penalty amounting to Rs. 5,000/- However, this section has been withdrawn from the assessment year 2018-19 and onwards after coming 234F into force.
In perspective of enhancing tax compliance, it is imperative that the returns are filed within the due dates specified in section 139(1). Therefore, section 234F has been inserted in the Income Tax Act. Now peoples need to be extra cautious with regard to the filing of Income Tax return on time to avoid any type of late filing fees.
Disclaimer – The above summary is based on the personal interpretation of the revised regulations, which may differ person to person. Hence, the readers are expected to take expert opinion before placing reliance on this article.