Penalty for Late Filing of Income Tax Return
Not filing your ITR (Income Tax Return) on time can lead to a penalty /Late Fees , but there are also other consequences and inconveniences attached to the delay. Refer Section 234F of Income Tax Act for Fees for default in furnishing return of income
Let us understand these in detail below.
Video Analysis of Section 234F Late Fees
Penalty for Late Filing u/s 234F : Commentary
- Effective Date : Section 234F of the Income tax Act which came into effect from April 1, 2018, i.e is applicable from AY 2018-19 (FY 2017-18 ) onwards
- Meaning of Fees : ” Fee” is not defined under the Income Tax Act. It can be said that the fee payable under section 234F is not tax or penalty but fee paid to the Government for the services of accepting and processing of Income Tax returns after due date.
However as per Supreme Court- ‘Fee’ is generally defined to be a charge for special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service though in many cases the costs are arbitrarily assessed. Commissioner H.R.E. v. Sri Lakshmindra Thirtha Swamiar Sri Shirur Mutt, AIR 1954 SC 282, 295″.
- “The amount of fee levied is supposed to be based on the expenses incurred by the Government or the agency in rendering the service though in many cases the costs are arbitrarily assessed. Fees are ordinarily uniform but absence of uniformity is not a criterion on which alone it can be said that a levy is in the nature of tax. In the case of a fee, no account is taken of the varying abilities of different recipients of the service to pay. State of Maharashtra v. The Salvation Army, Western India Territory, AIR 1975 SC 846″.
- “A fee is a charge for the special service rendered to a class of citizens by Govt., or governmental agencies and is generally based on the expenses incurred in rendering the services P.M. Aswathanarayana Setty v. State of Karnataka, AIR 1989 SC 100″.
- Mandatory : Section 234F late Fees is mandatory . ( It is not at the discretion of Assessing Officer)
- To Whom Apply/ Applicability of section 234F : Section 234F late Fees provision will apply to a person
- who is required to furnish a return of income under section 139 [ Refer Para 1.3 below]
- who fails to furnish the return within time prescribed in section 139(1) but furnishes belated return or
- Who does not file the return;
- To Whom Section 234F does not apply : The provision will not apply, if any person (other than firm or company) voluntarily furnishes return of income, if total income ( is without giving effect to sections 10(38), 10, 10A, 10B, 10BA or deduction under Chapter VI-A ) is below the threshold limit provided under the Act. To illustrate,
- Mr. A, aged 50 years, having total income of Rs. 2,40,000 for the assessment year 2019-20, is not obliged to furnish his return of income under section 139; however, if he wishes to furnish his return of income voluntarily after the due date specified under section 139(1) [subject to other provision of the section], he is not required to pay any late fee under the section 234F.
- Mr A Aged 50 years, having Gross total income of Rs. 2,60,000 for the assessment year 2019-20, and deduction u/s 80C is Rs 20000. Now Mr A’s total Income before deduction is above Rs 250000 and is required to file Income Tax return u/s 139 of Income Tax Act , there fore he is liable to pay late fees u/s 234F of Income Tax Act. of Rs 1000.
- Earlier Section made Inoperative : Finance Act, 2017 has made the section 271F inoperative with effect from 1-4-2018, that, is from assessment year 2018-19. [ before Section 234F, there was section 271F of Income Tax act which provided for penalty of Rs. 5,000 for failure to furnish return of income within specified time. However, the Assessing Officer may or may not impose such penalty having regard to the facts in each case. In other words, the penalty was not mandatory. ]
- Reasons for Section 234F Late Fees : Memorandum explaining the provision of Finance Bill, 2017 states the reason as follows:
“In view of the non-intrusive information-driven approach for improving tax compliance and effective utilization of information in tax administration, it is important that the returns are filed within the due dates specified in section 139(1). Further, the reduced time limits proposed for making of assessment are also based on pre-requisite that returns are filed on time.”
- How to pay 234F late Fees : 234F late fees is paid at the time of filing of Income tax return. If you have refund in Income Tax return , then 234F late fees is adjusted from refund, otherwise it has to be paid in cash
- Amount of Late fees
The fee payable under the section is as under:
| Circumstances | Amount of fee | |||
(a) If total income is below threshold limit (in case of certain assessees like individual, HUF, etc.) | Nil | |||
(b) If total income doesn’t exceed Rs. 5 lakh (irrespective of date of furnishing of return or non-furnishing of return) | Rs. 1,000 | |||
| (c) If total income exceeds Rs. 5 lakh | ||||
| Rs. 5,000 | |||
| Rs. 10,000 |
1.1 Penalty for Late Filing u/s 234F for AY 2019-20
| E- Filing Date | Total income Below Rs 5,00,000 | Total income Above Rs 5,00,000 |
| 31st Jul 2019 ( Non Audit Cases ) | Rs 0 | Rs 0 |
| 30th September 2019 ( Tax Audit Cases/Company ) | Rs 0 | Rs 0 |
| 1st August 2019 to 31st December 2019 (Non Audit Cases) | Rs 1000 | Rs 5000 |
| Between 1st October 2019 to 31 st Dec 2019 (Tax audit Cases) | Rs 1,000 | Rs 5,000 |
| Between 1st Jan 2020 to 31st March 2020 (Audit/ Non Audit Cases) | Rs 1,000 | Rs 10,000 |
1.2 Penalty for Late Filing u/s 234F for AY 2018-19
| E- Filing Date | Total income BelowRs 5,00,000 | Total income AboveRs 5,00,000 |
| 31st August 2018 | Rs 0 | Rs 0 |
| Between 1st Sep 18 to 31 st Dec 18 | Rs 1,000 | Rs 5,000 |
| Between 1st Jan 19 to 31st March 19 | Rs 1,000 | Rs 10,000 |
1.3 Applicability of Section 234F
The provision of section 234F will apply to a person who is required to furnish a return of income under section 139. Section 139 requires furnishing of return of income in case of every person under specified circumstances as under:
| Category of person | Obligation to furnish return of income | Section |
| Any person (other than company and firm) | if total income exceeds the maximum amount which is not chargeable to income tax [without giving effect to sections 10(38), 10, 10A, 10B, 10BA or deduction under Chapter VI-A] | 139(1) |
| Individual, HUF (being resident) | ♦ if holds or is beneficiary of any asset(including financial interest in any entity) located outside India; or ♦ having any signing authority in any account located outside India; | 139(1) |
| Company or a firm (including LLP) | Irrespective of its total income (including loss) | 139(1) |
| Any person | ♦ For carry forward of specified losses | 139(3) |
| ♦ For claiming deduction/exemption. | 10A, 10B, 80-IA, 80-IB, 80-IC etc. | |
| Charitable or religious Trust | ♦ if total income exceeds (without giving exemption u/ss 11 to 12) maximum amount which is not chargeable to income tax; and | 139(4A) |
| ♦ to claim exemption u/s 12A | 12A(1)(ba) | |
| Political Party | ♦ if total income exceeds (without giving exemption u/s 13A) maximum amount which is not chargeable to income tax; and | 139(4B) |
| ♦ to claim exemption u/s 13A | Third proviso to section 13A | |
| Research Association, News Agency, Certain Association/Educational/Medical Institution, Trade Union, Mutual Fund, Securitization Trust, venture capital company/fund etc. | If the income (without giving exemption u/s 10) exceeds the amount not chargeable to tax. | 139(4C) |
| Any University/College/Other Institution approved u/s 35 | Irrespective of income or loss | 139(4D) |
Explanation 1 of section 139(1) defines “due date” for furnishing of return of income in respect of certain assessee as under:
| Category of person | Due Date | ||||||
| Any assessee who is required to furnish transfer pricing report u/s 92E | 30th November of the assessment year | ||||||
Any assessee (other than above) being:
| 30th September of the assessment year | ||||||
| In case of any other assessee | 31st July of the assessment year |
When Section 234F Late Fees is leviable and when not Leviable
| Type Of Assessee / Return | Return Filing Liability U/s. 139 | Return Filed Up To Due Date U/s. 139(1) | Late Filing Fee under Section 234F Leviable or Not |
| Company (Original Return) (Nil Income / Positive Income / Loss) | In every case there is a liability without any threshold limit of income | No | Late Filing Fee under Section 234F Leviable (even for nil income / loss return) |
| Firm (Original Return) (Nil Income / Positive Income / Loss) | In every case there is a liability without any threshold limit of income | No | Late Filing Fee under Section 234F Leviable (even for nil income / loss return) |
| Individual, HUF, AOP, BOI, Artificial Judicial Person (Original Return) | If total income before taking benefit of Chapter VI-A (i.e., 80C etc.), Section 10(38) i.e., LTCG of equity shares etc., 10A, 10B, 10BA exceeds basic exemption limit i.e., Rs. 2.50 lacs (if below 60 years) / 3 lacs ( if 60 years or above) / 5 lacs (if 80 years or above) | No | Late Filing Fee under Section 234F Leviable 1. Gross Total Income of a non senior citizen is Rs. 2,80,000 and 80C deduction is Rs. 60,000 and Total Income is Rs. 2,20,000. The late fee is leviable for default. Please refer sixth proviso to Section 139(1) applicable w.e.f. 01.04.2006) 2.Gross Total Income of a senior citizen is Rs. 295000 . Then Section 234F Late fees not leviable as he is not required to file ITR as Basic Exemption Limit for senior Citizen is Rs 300000. (Note : Loss Returns : The fee may not be leviable for late filing / non filing of loss return. It is so because filing of loss return ( of Business or Capital Gains) is though mentioned in section 139 but is not mandatory. It is optional. As per section 139(3) it is required to be filed only for carry forward of losses U/s. 72. The claiming of carry forward is optional (a person may not wish to carry forward loss) hence filing of loss return is also optional. If loss return is not filed / late filed only the carry forward of loss is not allowable but the fee is not leviable. |
| Individual, HUF, AOP, BOI, Artificial Judicial Person (Fourth Proviso To Section 139(1)) (Resident and Beneficial Owner Of Assets / Signing Authority In Account etc. Located Outside India not covered above) (Original Return) (Positive or Nil Income / Loss) | In every case there is a liability without any threshold limit of income | No | Late Filing Fee under Section 234F Leviable (even for nil income / loss return) |
| Charitable / Religious Trust, Society, Institution etc. (Section 139(4A) | If total income before taking benefit of section 11 and 12 exceeds basic exemption limit i.e., Rs. 2.50 lacs. | No | Late Filing Fee under Section 234F Leviable (For loss return / below threshold limit income return fee is not leviable). (Note : If not registered U/s. 12AA or not claiming benefit of Section 11 & 12 / become ineligible etc. then threshold limit for return filing liability is basic exemption limit). |
| University, Educational Institution, Hospital, Medical Institutions etc. claiming exemption U/s. 10 (Section 139 (4C)) | If total income before taking benefit of section 10 exceeds basic exemption limit i.e., Rs. 2.50 lacs. | No | Late Filing Fee under Section 234F Leviable (Note : If not claiming benefit of Section 10 / become ineligible then threshold limit for return filing liability is the basic exemption limit) |
| Political Party (Section 139(4B) | If total income before taking benefit of section 13A exceeds basic exemption limit i.e., Rs. 2.50 lacs. | No | Late Filing Fee under Section 234F Leviable (Note : If not claiming benefit of Section 13A / become ineligible then threshold limit for return filing liability is the basic exemption limit) |
| University, College etc. referred to in Section 35(1)(ii) & (iii), Business Trust and Investment Fund (Not covered above) (Positive Income / Nil Income / Loss) | In every case there is a liability without any threshold limit of income | No | Late Filing Fee under Section 234F Leviable (even for nil income / loss return) |
| Revised Return (All Assesses) | NA | NA | Late Filing Fee under Section 234F Not Leviable (Note : The revised return is only optional and last date for filing the same is mentioned in a separate section i.e., 139(5) and not in section 139(1). Here both the conditions for levy of fee are not satisfied. Hence no fee is leviable for late filing of revised return.) |
| Defective Return Rectification (All Assesses) | NA | NA | Late Filing Fee under Section 234F Not Leviable (Note : Such return is only optional and last date for filing the same is mentioned in section 139(9) and not in section 139(1). Hence no fee is leviable for non submission / late submission of rectified return within 15 days time limit prescribed in section 139(9).) (Note : However, due to non filing of rectified return in time, the original return filed U/s. 139(1) shall become invalid and where there was mandatory liability U/s. 139(1) for filing of valid original return, the fee may be leviable for non filing of original valid return.) |
| Return In Response To Notice U/s. 148 / 142(1) / 153A (All Assesses) | NA | NA | Late Filing Fee under Section 234F Not Leviable (Note : Though a return filed in response to these notices is treated as a return required to be furnished U/s. 139 but the due / last date furnishing is mentioned in section 148 etc. themselves and not in section 139(1). Thus, both conditions for levy of fee are not satisfied. Therefore, if return in response to notice U/s. 139(1) is not filed within time allowed in notice then fee is not leviable.) (Note : However, where there was mandatory liability U/s. 139(1) for filing of original return, and the original voluntary return was not filed, then the fee may be leviable for non filing of original valid return.) |
Time to Revise Income Tax Return
If you had made mistakes in Income Tax return than you can revise ITR.
Income Tax Act has been changed , now you only have time till March 2020 to make the change (for ITRs for FY 2018-19).
Section 139(5) of Income Tax :-
” If any person, having furnished a return under sub-section (1) or sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.”
Earlier, taxpayers had a 2-year long window to revise and resubmit an erroneous ITR, which has now been decreased to one year from the end of the financial year.
Therefore, the earlier you file, the longer would be the window available with you for revising your returns to rectify errors if any.
Payment of Interest
If you do not file the income tax return on or before the due date, you would be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid as per section 234A.
Note : One’s ITR cannot be filed if one hasn’t paid the taxes.
The calculation of penalty will start from the date immediately after the due date i.e. 31st July (For current year i.e FY 2018-19 in Non Audit Cases). So, the longer you wait the more you will have to pay.
Carry Forward of Losses is Not Allowed
If you have incurred any losses during the year say a loss under the head Capital Gains or any loss in your business, make sure you file your return within the due date. [ Refer Section 139(3) of Income Tax Act]
Not doing so will deprive you of carrying forward these losses to the next years for set off against income in future years.
Note : This rule would not apply to losses from house property. Accordingly, if you have a loss under the head house property, even if you do not file your return within the due date, you can still carry forward these losses to future years.
Delay in Receiving Refunds
In case you’re entitled to receiving a refund from the government for excess taxes you have paid, you must file your return before the due date to receive the refund at the earliest.
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