CA Pardeep Kumar

Finance Act, 2017 inserted a new Section 234F for levy of “Late Filing Fee” (hereinafter referred to as “Fee”) on belated returns. The newly inserted section has become applicable w.e.f. 01.04.2018 and therefore belated returns filed for AY 2018-19 onwards would be governed by the provisions of this Section.

Grounds for Levy of Fee under Section 234F

New section has burdened the taxpayers with late filing fees on the following grounds:-

(i) Timely filing of returns would improve tax compliances;

(ii) It would lead to effective utilization of information for better tax administration;

(iii) Reduced time limits proposed for making of assessment are also based on pre-requisite that returns are filed on time.

Amount of Late Filing Fee under Section 234F

The fee prescribed fee for filing belated returns is as below:-

 

 

 

Date of filing of ITR

 Applicable Fee u/s 234F
 

If Total Income exceeds Rs. 5 Lakh

(in Rs.)

 

If Total Income is upto Rs. 5 Lakh

 (in Rs.)

 

After the due date but on or before the 31st day of December of the relevant Assessment Year.

 

5,000/-

 

1,000/-
 

On or After 1st day of January but before March 31st day of March

 

10,000/-

Late Fees under Section 234F Mandatory in Nature

This fee is mandatory in nature and is required to be paid before filing of return of income.

Whether Late Fees under Section 234F applicable on all belated returns

A question comes to mind that whether this fee is payable in all cases where the return is filed after the due date. The answer to this is that there may be two categories of return filers:-

1. Those who are under statutory obligation to file the return of income;

2. Those who voluntarily filing their income tax returns.

The new section covers only the first category of return filers. Meaning thereby belated return filed by the person who is not under statutory obligation to file the return but file it voluntarily would not be liable to pay fee u/s 234F. Section 234F is reproduced below:-

“Section 234F- Fee for default in furnishing return of income.

234F. (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 the said section, he shall pay, by way of fee, a sum of,—

  • five thousand rupees, if the return is furnished on or before the 31st day of December of the assessment year;
  • 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 return of income required to be furnished for the assessment year commencing on or after the 1st day of April, 2018.]”

In view of the aforesaid, the section clearly says that the fee shall be payable only by those taxpayers who are required to furnish a return of income under section 139. Therefore the second category of return filers who are voluntarily filing their income tax returns would not come within the preview of this newly inserted section.

Other Consequences of Filing Belated Return

  1. Interest at the rate of 1% per month on unpaid amount of tax shall be payable u/s 234A;
  1. If there is a loss from capital gains or loss from business/profession or loss from the activity of owning and maintaining race horses then filing of return within due date is mandatory to carry forward such losses. If ITR is filed after due date then there would be no carry forward of losses.

3. Belated return would also impact the amount of interest on refund. If the return is filed in time then interest on refund will be granted from 1st April of assessment year to the date on which the refund is actually processed.

If the return is not filed within due date then interest will be granted from the date when return is filed instead of 1st April of assessment. Thus there would be a loss of interest on income tax refund.

Concluding Remarks

In view of the aforesaid, it is always advisable to file the return of income on or before the due date if there is an obligation to file the return of income. Pressure of filing of return before due date by the voluntary filers may be deferred as the facility u/s 139(4) is still available and there is no cost involved.

(The author, Pardeep Kumar, is a Chartered Accountant from Rohtak, Haryana. He can be reached at pardeep.kumar2@escorts.co.in)

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11 responses to “Belated ITRs – Whether A Costly Affair for Every Return Filer”

  1. CA Hitesh says:

    The latest press release from PM, FM, Adhias & CBDT: We know very well, half of India is under severe flood threat. Don’t bother with your health & wealth. Hell with your sick relatives. Forget helping near & dear ones. These are all bullshits. Won’t help you. File your tax return before 31st July. Help your self from penalties.

  2. Dr. O.P Ailawadi says:

    This year Form16 and 16A were not made available to assesses by my bank before 18June. Thus less than 2 months period was available for filing the Return .If penalty is to be imposed, the govt. should ensure that assesse gets sufficint time for filing the Return.

  3. PUSPENDU Dutta says:

    Sir this discussion is very good. In my opinion before imposing such penalty govt must rectify tds credit facility. Right now tds return filing date is 31 st may, thus before filing of tds return no one can’t get proper credit of deducted amount. Hence we are getting 2 months time this is very short time for an assessee for an professional also.

  4. VINOD KUMAR GUPTA says:

    The provision of section 234F is very harsh. Since this the first year the department should take a liberal approach. The delay in filing of income tax return due to several reasons which is beyond control of an assesses, one of the reason , in most of the cases TDS amount is not reflecting in form no. 26 AS. Interest certified on housing loan not issued by proper authority in time.

  5. Mohan M says:

    A good information; my question is Section 234F whether applicable to the nil return filing for the F.Y.2017-18? please explain it

    • CA Pardeep Kumar says:

      Dear Mr. Mohan,
      It depends upon the “Person” filing the return of income. For example in the case of Company, return filing is statutorily required whether there is an income or loss. On the other hand in the case of Individual, ITR is required to be filed only if the Total Income (without considering certain exemptions u/s 10 and deductions under chapter VIA) exceeds the exemption limit.
      As explained in the article, in case a person is statutorily required to file the return, section 234F would be applicable.

  6. Sandeep Rathi says:

    explained in very lucid and simple manner

    Thanks

  7. Vishal Gohil says:

    Yeah we CA are really in pressure right now. Hope 234F should be levied.

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