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