The Ministry of Finance has not extended the due date of filing of return of income for non-audit cases beyond 10th January 2021 and for instance if an individual files a return of income declaring income between Rs. 2,50,000/- (Rupees Two Lakh and Fifty Thousand only) and Rs. 5,00,000/- (Rupees Five Lakhs only), though he need not pay any tax because the entire tax payable is allowed to be deducted as rebate under section 87A, his return can be uploaded on payment of late fee Rs. 1,000/- (Rupees One Thousand only) payable u.s 234 F. But if it is Rs. 5,00,100/- (Rupees Five Lakhs and One hundred only) i.e. Rs. 100 more, he cannot file the return of income unless he pays Rs. 25,100/- (Rupees Twenty Five Thousand and One Hundred only), as per the calculation given below:
|Income Tax on Rs. 5,00,100 –||12,520*|
|Cess @ 4%||501|
|Interest u.s. 234A||130|
|Interest u.s 234B||1300|
|Interest u.s 234C||652||2,082|
|Total Tax and Interest including Cess||15,103|
|Add; Late Fees u.s 234F||10,000|
|Total Tax and Late Fees||25,103|
|Round off to the nearest Ten||25,100|
*(the tax rates are applicable from Rs. 2,50,000 i.e @ 5% from Rs. 2,50,000 to Rs. 5,00,000 is Rs. 12,500 and Rs. 20, which is 20% on Rs.100)
For an additional income of Rs. 100/- the assessee has to pay an whooping Rs. 25,100/- (Rupees Twenty Five Thousand One Hundred only)
It is not fair and equitable to burden the assessee to pay such an exorbitant amount. In similar situations in the past marginal relief was provided in the Income Tax Act, while such anomaly was brought to the notice of the exchequer. The marginal relief should be that the tax payable should not exceed the income that exceeds the limit and in the above example the tax will be limited to Rs. 100/- (Rupees One Hundred only) and in addition the late fees of Rs. 10,000/- is to be paid.
Though the Government did not come forward to extend the due dates of filing the Returns of Income, the late fees can be waived to help the business community which is suffering heavily due to Covid-19 pandemic to a very great extent.
For audit cases also the Tax Audit Reports should have been filed on or before 15th January and the returns should be filed on or before 15th February and if they are not filed in time they have to pay heavy penalty in addition to interest and late fees. In order to help the business community to some extent the Government can think of waiving the late fees and penalty in addition to providing marginal relief in such cases also.