Section 234F: Penalty for Late Filing of ITR

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Hiral Vakil

Income Tax Filing
ITR Penalty
Section 234F
Last updated on January 6th, 2022

What is Section 234F?

In Budget 2017, the government inserted a new section under the income tax act to penalize late filers of a tax return. From FY 2017-18, in case of delay in filing of a tax return by an individual whose income exceeds basic exemption limit penalty is levied u/s 234F. From Financial Year 2021 onwards, the maximum penalty for late filing of returns is reduced to Rs.5,000.

Late fee u/s 234F if ITR is filed after Due date:

  1. If Total Income is greater than 5 lakh, late fee is Rs. 5,000/-.

2.If Total Income is less than 5 lakh, late fee is Rs. 1,000/-.

Who is Covered u/s 234F?

Individuals, HUFs, Company, Firm, AOP, etc. will be covered under the scope of section 234F of income tax act. All persons will be liable to pay the late filing fees in case the miss the deadline to file their returns.

The due date to file the ITR for AY 2021-22 has been extended from 31st of July to 30th of September 2021
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The due date to file the ITR for AY 2021-22 has been extended from 31st of July to 30th of September 2021

Penalty u/s 234F for Late Filing of ITR

Let’s take an example to understand it better:

Ajay is a salaried individual and he forgot to file his return for FY 2020-21. His total income for a year is INR 7,20,000. TDS on his salary income has been deducted by his employer. And he decided to file his return on 12th March 2022.

In this case, even though TDS has been deducted from his income. Ajay will be penalized with late filing fees of INR 5,000. Since his income is more than INR 5,00,000.

How to Pay Penalty u/s 234F?

Taxpayers shall use the respective challan for self assessment tax i,e, Challan 280 to pay the penalty for late filing fees. Select type of payment as “Self Assessment (300)”. You will receive a BSR code on the successful payment of the tax. Mention the BSR code and the challan number whilst filing your return.

Challan 280 - Self Assessment Tax Payment Option

There might be a probability where the Income Tax Department deducts excess TDS. We could use the same excess TDS deducted to adjust it against the late filing fees of 234F. Taxpayers would have received this excess TDS by way of refund.

Rules to Carry Forward Losses

It is imperative that taxpayers who trade and have incurred losses file their returns on time. In case they don’t file their returns on time, they won’t be allowed to carry forward their losses in to the next years to set off against income in future years.

FAQs

Can we file the Income Tax Return (ITR) without paying the tax?

The Income Tax Returns (ITR) can be filed only if we have paid the tax due to the government. If you submit the ITR without paying then your Income Tax Return can be declared Defective.

What is Section 234F?

As per Section 234F of Income Tax Act, if a person is required to file Income Tax Return (ITR) as per the provisions of Income Tax Law [section 139(1)] but does not file it within the prescribed time limit then late fees have to be deposited by him while filing his ITR form.

What is the penalty for the late filing of ITR u/s 234F?

– Taxpayers earning income between INR 2.5 Lakh to INR 5 Lakh will have to pay a fine of INR 1,000
– Taxpayers earning income above INR 5 Lakh will have to pay a fine of INR 5,000 if the ITR is filed before December 31st of the Assessment Year
– Taxpayers earning income above INR 5 Lakh will have to pay a fine of INR 10,000 if the ITR is filed after December 31st of the Assessment Year

Got Questions? Ask Away!

  1. Hey @Shweta_Saini

    Advance tax is a ‘Pay as you earn’ tax, so it is required to be paid during the financial year in four different instalments in case your Taxable Liability is more than INR 10,000 for the financial year which stands true for you.

    The due dates for advance tax installments are:

    • 15th June - 15% of the tax liability
    • 15th Sept - 45% of the tax liability
    • 15th Dec - 75% of the tax liability
    • 15th March - 100% of the tax liability

    If you are eligible to pay advanced tax but have not paid advance tax, the penalty will be applicable u/s 234B and 234C.

    Let us know if you have any further questions!

  2. Hi Team, I had assumed that I will be able to pay advanced tax before March because I thought I could go for presumptive tax filing. But now it looks like I cannot opt for a presumptive taxation scheme. So does it mean that I did not pay the advanced quarterly tax that I was supposed to pay?

    If yes, what is the penalty in every case or are there some exceptions to avoid this interest penalty?

    Thanks in advance!

  3. Hey @riya_gupta

    You will be charged an interest penalty under section 234C for the delay/non-payment of advance tax during the year @1% per month on the shortfall amount. Additionally, under Section 234B a penalty interest is imposed on the taxpayers in case the advance tax payment is less than 90% of assessed tax liability during the year.

    You can avoid interest u/s 234B by paying at least 90% of your assessed tax liability by March 15, 2021.

    Hope this helps!

  4. Hey @TeamQuicko

    I have LTCG of more than 7 lakhs from the equity for this year. Is there a way to reduce my tax liability? Also, do I have to pay the tax in advance? If I fail to do so, what will be the penalty/interest percentage I have to pay during my tax filing in 2020?

  5. Hey @ViraajAhuja47, you can set off against non-speculative business loss like F&O for the current year. Long-term capital losses for the previous as well as the current year. Yes, you are required to pay advance tax in case your tax liability is more than INR 10,000 for the FY. The penalties for non-payment of advance tax are:

    Non-payment of Advance Tax u/s 234B 3: Interest at 1% in case the taxpayer fails to pay 90% of the tax liability in the same FY
    Delay in Payment of Advance Tax u/s 234C 1: if there is a delay in tax payment than interest @ 1% is applicable.

  6. Hello @S_P

    Tax paid on or before 31/03/2021 will be considered as advance tax for FY 2020-21. So a trader can determine the profits between 15th March to 31st March and pay the tax on 31st March, there will be no interest levied.

    Hope this helps!

  7. Hi @TEst_Netflix,

    Tax audit is applicable when:

    1. Turnover is above the threshold limit
    2. Profit is >=6% of the turnover

    You can use this tool to determine if tax audit is applicable to you:

    It is always a good practice to file your ITR and report all your financial transactions to avoid notice from the Income Tax Department. Especially after the SEBI and CBDT’s data partnership. If your total income is below the basic exemption limit, you won’t have any tax liability.

  8. Do I have to pay Advance Tax if the TDS for the year is sufficient to cover tax liabliltiy?

    Does Dividend on equity shares attract separate Advance Tax or is it just another source of income?

  9. Hi @vivek25,

    You are liable to pay advance tax if your total outstanding tax liability for the financial year after TDS is above INR 10,000.

    To calculate your advance tax liability you need to add your estimated income for the financial year from all sources including - Salary, House Property, Capital Gains, Business & Profession and other sources.
    Next, subtract all eligible deductions, expenses, and Tax Credit available to you.
    Now, if your outstanding tax liability is above INR 10,000, you need to pay advance tax to avoid penalty u/s 234B and 234C.

    Hope this answers your query :slight_smile:

    You can also use the advance tax calculator to know your advance tax liability under the old and new tax regime

  10. Hi
    When I pay the advance tax through the ZERODHA-QUICKO platform, does it get saved/stored? For example I have paid for Q1. so when I have to pay for Q2, will this be automatically calculated?
    Thanks

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