Section 234A: Interest Penalty for late filing of ITR

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Hiral Vakil

Income Tax Filing
ITR Penalty
Section 234A

The due date for filing the ITR is always defined and if you miss the deadline to file your ITR, you might face the consequences like having to pay interest as per Section 234. Interest Penalty shall be levied under section 234A in case of late filing of ITR. Apart from that, there are two more types of interests under section 234 which fall under the Advance Tax category. Hence it is also important to remember the advance tax due dates:

Advance Tax Filing
CA Assisted Advance Tax calculation and payment for Individuals and businesses with tax payable more than INR 10,000
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Advance Tax Filing
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So let’s discussing Section 234A in this article. As we know, ITR for a particular Financial Year needs to be filed within the prescribed time limit i.e, 31st July of the next financial year. Hence, if you fail to file your return within that prescribed time, you will be liable to pay interest penalties u/s 234A. Moreover, if you do not file your return in the prescribed time, you will be in one of the following three positions:

  1. You have outstanding taxes to pay to the IT department
  2. You are eligible for a tax refund from the IT department
  3. Your taxes have been paid on time with no refund expected or taxes payable.
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If you fall under the 2nd or 3rd position, you need not worry about attracting interest for not filing your ITR on time. However, Assessing Officer may still choose to charge some interest if he/she thinks it is necessary.

Therefore, in case of delay in filing the return, a taxpayer will be liable to pay interest at 1% of tax liability per month or part of the month.

30th November, 2020
The extended due date to file ITR for FY 2019-20/AY 2020-21.
30th November, 2020
The extended due date to file ITR for FY 2019-20/AY 2020-21.

Time period for levy of interest u/s 234A

Penal interest u/s 234A is levied from the first date after the due date of filing of ITR till the actual date of filing. For example, The extended due date to file ITR for FY 2019-20 is 30th November 2020. And a taxpayer files ITR on 7th December 2020 then penal interest u/s 234A will be levied. And it will be imposed from 1st April 2020 till 7th December 2020 i.e, 9 months.

Rate of Interest applicable u/s 234A

Interest is applicable at 1% per month or part of a month. The nature of interest is simple interest. In other words, the taxpayer is liable to pay simple interest at 1% per month or part of a month for delay in filing ITR.

Example for Penalty for late filing of ITR Under Section 234A

Arpan is an engineer. The due date for filing ITR is 31st August 2019. However, he filed it on 8th December 2019. His tax liability as per tax rates comes to INR 10,550.

In this case, as Arpan filed his ITR after the due date, 1% of his total tax liability will be added for each month of delay, as interest under Section 234A.

So total interest amount = INR 105.5 x 4 (interest to be calculated for four months) = Rs. 422

So now Arpan will have to pay 10,550 (tax) + 422 (interest) = Rs. 10,972

Section 234B: Interest penalty for non-payment of Advance Tax
The due date for filing the ITR is always defined and if you miss the deadline to file your ITR, you might face the consequences like having to pay interest based on Section 234
Read More
Section 234B: Interest penalty for non-payment of Advance Tax
The due date for filing the ITR is always defined and if you miss the deadline to file your ITR, you might face the consequences like having to pay interest based on Section 234
Read More

FAQs

What is the difference between 234A and 234B?

Interest u/s 234A is levied on taxpayers if they delay in filing their Income Tax Return (ITR). While Interest u/s 234B of Income Tax Act is levied upon those taxpayers who default in payment of Advance Tax.

What happens if I delay filing my ITR?

First of all, If your income falls under the taxable bracket you have to file your ITR without fail. Secondly, If you missed the deadline to file the ITR you can still file it but you may attract penalties. Moreover, If you don’t pay your taxes on time then if you are claiming any refunds they will get delayed. You will get lesser time to revise your ITR. and Lastly, You will have to pay interest on the taxable amount if you delay filing your ITR.

What are the documents needed to file ITR?

Following are the documents required to file ITR:
– Aadhaar
– PAN
– Bank account details
– TDS Certificate (Form 16, 16A, 26AS)
– Tax payment challan (Self-assessed or Advance tax)
– Original notice (In case of refiling the ITR)

Who is eligible to file ITR?

All PAN holders should ideally file their ITR. However, If your income is more than rupees 2.5 lakh p.a then you are mandatorily eligible to file your ITR.

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