Representation On Relaxing The Application Of Section 234F Of Income Tax Act And Extension Of Due Date For Filing Income Tax Returns Of Individuals And Small Businesses
The Karnataka State Chartered Accountants Association (R) (in short ‘KSCAA’) is an association of Chartered Accountants, registered under the Karnataka Societies Registration Act, in the year 1957. KSCAA is primarily formed for the welfare of Chartered Accountants and represents before various regulatory authorities to resolve the professional problems faced by chartered accountants and business community.
We have written to your good selves many a times populating issues and possible solutions. Herein, we are presenting difficulties and hardships faced by the trade, consultants and public at large pursuant to introduction of Section 234F and also, relating to adhering the timelines for filing of Income Tax returns within 31st July 2018, the due date as mentioned in Explanation 2 of Section 139(1). Having a wide outreach to Chartered Accountants, tax practitioners, trade bodies etc., and issues populated by them, KSCAA felt it necessary to put forth these issues and seek your redressal mechanism to alleviate the pain caused as well as seek a reasonable extension of due date.
We wish to present before you the following facts on the ongoings and public sentiment on the matter under two segments:
A. Regarding Section 234F of the Income Tax Act
The Union Budget, 2017 introduced Section 234F for levy of fee for delay in filing of Income Tax Return beyond due date.
Our view-points:
• In view of various interpretations, general connotations and judicial precedents, fees can be categorized as compensatory or regulatory. While ‘Compensatory’ involves something of a quid pro quo, ‘Regulatory’ involves regulating activities which Government feels important but must be reasonable and not excessive and the charge would be in lieu of license.
• The levy under Section 234F is neither for a service nor for any kind of license. Hence, it partakes the character of penalty because it is punitive in nature rather than compensatory. Further, mere change in nomenclature of a levy disregarding its intention and function cannot alter the character of levy.
• Opportunity of being heard is a foundational concept of principles of natural justice. Notice and fair hearing are two aspects which are essential and elementary even in tax laws. It is very important to provide a reasonable opportunity of being heard for such a levy of penalty, which is being introduced under the garb of ‘fee’ and is not built on sound fundamental principle of natural justice.
• The Department is already deriving revenue on late filings in the form of interest under Section 234A, 234B and 234C on the count of delay in filing of returns, non-payment of advance tax and irregular or non-payment of advance tax installments respectively. Hence the Revenue is sufficiently compensated.
• The filing of return is being narrowed down to assessment year itself and to top that up, this imposition seems too harsh and regressive.
• The nominal earners who are brought into tax net may be discouraged to file the returns though genuinely they wish to file the returns.
• For those assessees whose income does not exceed maximum amount not chargeable to tax, but, filing returns only for the sake of claiming the refund as well as those assessees who file with ‘Nil’ tax liability, this levy seems agonizingly harsh.
Therefore, on behalf of the tax paying community of India, and on behalf of the tax professionals who assist the tax payers in honestly complying with the tax laws of the country, we strongly urge you to withdraw this levy of late fee under Section 234F of the Act.
B. Regarding extension of due date for filing income tax returns of individuals and small businesses:
The due date fixed for filing returns i.e. on or before 31stJuly seems more than sufficient to comply but for various factors which are practically acting collectively against such compliance on the part of the assessees, trade and practitioners. We have presented here in below the actual facts for your better understanding:
• The due date presupposes that all returns pan India can be filed within a span of four months from the completion of the financial year. But practically the filing can only start around June or even later part of June for few class of assessees and window for filing within the due date immediately closes next month itself pursuant to myriad of factors as underlined herein infra.
• The tax return preparation involves compilation of data from various sources, say from bank, from businesses in the form of TDS certificates, employer’s Form 16, credit of tax in Form 26AS despite issuance of such records by the respective deductors. It is a known fact that the TDS certificate is only issued in June and many a times, Deductors issue TDS certificates late due technical glitches or to delayed filings of e-TDS returns by them.
• Many assessees have multiple businesses and streams of revenue, in genuine situations, may have to await the proper reflection of tax credits and thereafter commence and forward it to their respective consultants. Also, GST compilation and reporting requires time and effort and has to conform with Form 26AS and follow up with the respective deductors for any inadvertent errors and such correspondences happen only after TDS is reflected and is complete in all respects.
• Also, certain documents may be lacking or incomplete on the part of assessees when they present to their consultants and would be prompted rightly to be provided. The process of such collation from respective sources would also kill time and it is not useful to start this process in April as everyone is aware that things gets reflected in TDS database only in June and it will be a futile exercise to follow up before 1stApril.
• Returns would not be comprehensive without considering all the streams of revenue. The tax credits, which sometimes get reflected belatedly and creeping every now and then into the tax credits also cause deviation in the reporting of income in returns. The veracity of the screening process consumes time and effort and filing without considering the same can have penal implications. Adhoc filing without considering all relevant income streams would be futile and incomplete. If the assessee waits for such reflection, there would be delay in filing and this mandatory levy of late fee under Section 234F imposes additional burden to the assessee for no fault of his.
• The tax department itself does not provide facility to file on 1stApril and does not release schema at the beginning of the Assessment Year for all categories of assessees. This is despite it having one full year from the date of assent by the Hon. President of India.
• Another point of due mention is frequent and intermittent changes to schema not doing any good to the already persistent woes.
• The e-TDS Return filing deadline for fourth quarter for the deductors being 31stMay and though there are penal provisions, many deductors for genuine reasons too are filing belatedly and the same is having a rippling effect on the deductees’filing woes.
This write-up is on the back of representations received from our members, tax practitioners and trade bodies who are in the thick of things with the assessees.
We would be highly thankful if you could extend the due date well in advance, which would be very useful in planning the filings for the assessees, businesses and practitioners. Also, we seek your intervention on unjust levy under Section 234F fees for filing beyond due date.
Thanks & Regards,
CA. Raghavendra T N | President
KARNATAKA STATE CHARTERED ACCOUNTANTS ASSOCIATION
No.7/8, 2nd Floor, Shoukath Building, S.J.P Road, Bangalore – 560002. India
T +91 80 2222 2155 | M +91 98801 87870| E president@kscaa.com | W kscaa.com
Link ITR Filing Due date with ITR E-filing Utility Release Date
Other Representations
1. Central Gujarat Chamber of Tax Consultants- Extend due date of ITR to 30.09.2018 & 30.11.2018 respectively
2. Association of Tax Practitioners, Chartered Accountants and Advocates, Aurangabad – Extend Due Date of ITR for AY 2018-19
Author Bio
It’s very remarkable effort by kscaa. We are in full support. This is a very harsh initiative taken during regime of mr jaitley. They have released schema in the 2nd half of may itself. Itr can’t be filed without TDs data which gets available after June. How can itr be filed in just 45 days on pan india basis. We strongly support this representations
It should be deleted because it is arbitrary, unethical, extra burden on tax payer, discourage the willing people who are first time filer. Further when there is specific provision for charging interest for delayed period then there should be no question of charging fee for delay filing of return. It is unconstitutional as the department not provided any services for filing return.
Read. Thanks for the initiative. Full support for the views to remove both provisions.
May be my opinion differ from others = But i think we as a CA should never ask for any extension of any due dates…
It is the assessees who is lethargic not CAs. Therefore assessees should bear the burden of penalties and fight for extension not the CAs
In my opinion no harsh steps to be taken while delay in filing of income tax return . there are so many causes behind it. one major problem is 26AS now this time i.e after due date of filing of TDS return so many people are still filing their TDS return imagine when 26AS would be updated. how they would filed their income tax return.
I agree and support it.
Yes, I agree, time extension required for salaried persons till 31st August, 2018 & others till 31st December 31st, 2018
Very Good initiative, our institute and Trade associations should also give such suggestions / request to the Govt. and I feel that our Govt is very responsive and will take a view in favour of the all taxpayers…, Keep it up.
I agree with all members reply, Thanks for the good effort taken by Karntaka association “KSCAA” This representation is very good but it needs to be taken by all associations at state level and also at all india level. Moreover introduction of GST and procedure for GST credit in the accounts ledger is not clear to many small firms . Hence the time extension is a must and tax authorities should feel the difficulties of the taxpayer
I fully support the demand for extension of last Date of Submission of IT Return. CMA sushil kumar nag.
Yes. It is not at all fair that in a short span of time the returns have to be filed. And this may also be noted that the interest is charged under sec.234 – A, B, C. why there is another sec. for late filing.
we are strongly favour to remover 234f or date msut be extended
If documents necessary for submission of Tax Return is made available in the end of 1st week of April than last date fixed for submission of Tax Return is o k.If this cannot be ensured by Tax Department than the last date of IT return should be extended. This year many bank has issued interest certificate after 10th of June.Issue of Form-16 was also delayed. In view of this above demand is justified and I support it,
illogical unilateral decisions taken by Govt !
In a nutshell , Govt wants to earn revenue for late filing of ITR on two accounts 1. As interest under 234A & 2. Levy under 234F .
Assessees who are falling below the taxable limit , in no case should come under 234F whether they are doing so to get IT refund or submitting a NIL tax return
Well done KSCAA. Government must take note of the representation and take corrective action. Penalty for not filing the ITR before due date is too harsh and without giving proper thought about it. Must remove Section 234F as well as extend due date.
we are strongly urge for remove 234f or date must be extended
BJP IN GENERAL & JAITELY, IN PARTICULAR, ARE RESPONSIBLE FOR INCREASE IN BP, DIABITIES, CHOLESTEROL AND TRESS RELATED DISEASES IN INDIA. THEY ARE WORST THEN VIRUSES. IF THE CARE FOR HEALTH INDIA, JAITELY MUST GO IMMEDIATELY. HE HAS FAILED KIDNEYS, CAN AFFORD EXPENSES, BUT NOT EVERY OTHER INDIAN. HE IS DEVIL, DEMON.
Yes, I’m fully agree.
OFFHAND
In addition to several reasons posed about the difficulty in e’filing tax return within the limited time, far short than normal, to have been allowed,may think of one more reason brought t notice in previous posts. That relates to the problem likely to be seriously faced in computation of LTCG and tax thereon, in case of short payment to be made good. As anyone concerned should have noted, the referred problem has to be traced to the lacuna/ want of clarity as to which of two Tables for CII to be adopted in respect of a capital asset acquired anytime before FY 2001-02 but sold in FY 2017-18. Further, a levy of added interest on advance tax short paid, if any, will arise. For MORE, refer the published article ON THE WEBSITE OF taxmann .com (year 2018.
the penalty should be declared as unconstitutional
GOOD.
1. What is the number of PANs issued by Income Tax Department?
2. What is the number of Income Tax Returns filed in AY 2017-18 totaling up to 31.03.2018?
3. What is the number of expected Income Tax Returns of all those who are not covered under Compulsory audit ?
4. What is the number of Practicing Chartered Accountants , who are filing the ITRs for common persons?. This figure may be available on net from ICAI.
5. What is the latest date when all required parameters were supposed to be available to a tax payer like Salary Certificate, TDS certificates, and likelihood of these really being available?
I am aware that not every salaried employee has received the Form 16(Salary Certificate) from his/her employer.
6.Are all Form 26AS really complete and updated, as the figures are supposed to match while filing Income Tax Return?
7. Last- How much time is required to file an Income Tax Return preferably correct, with all required details?
Any official, specially from Income Tax Department will be able to answer all the points, and enough time should be allotted for filing the Income Tax Return. This is one of the work that a person has to do, and the CA who files return on behalf of the person. There are people who are not keeping well, who are senior citizen and Very Senior Citizens and unable to get time to put all papers together, people who may be out of country, people who are themselves or some of their kiths and kins are not well.
YES, I AGREE
In July we required to file the 2 GST return and 1 TDS return for the current Month / quarter, will lead lack of time to concentrate the preparation of the clients last year accounts.
Fully agreed In-fact form 26as is made available only in the last week of june and Income Tax Server have been shut down about every day after 10 pm. When I fill up the return as a common man. So I fully agreed with the Contents and view expressed.
yes it is right,due date should be extended and 234f penalty to be dropped.
This is really great… Great job done by Karnataka State Chartered Accountants Association
Thanks for the good effort taken by Karntaka. This representation is very good but it needs to be taken by all associations at state level and also at all india level. Moreover introduction of GST and procedure for GST credit in the accounts ledger is not clear to many small firms . Hence the time extension is a must and tax authorities should feel the difficulties of the taxpayer.
Good Initiative requires time for preparations. Sound Knowledge of current scenario is required cause being tax professional we also require time to collect data and present in correct manner. Merely because GST is implemented govt assumes all accounts are in shape and timely prepared, however many more clients are not falling under the preview of various acts, for which record are to be arranged and more time is required. Otherwise Assessee’s like pensioners, salaried employee, small traders will have more impact cause we will have to take call for other clents.
I AGREE
THIS IS A GOOD INIGIATIVE
I thank very much for the efforts taken by the Karnataka CA Association for the non levy of penalty u/s 234F as well as Extention for filing Return.
Great Efforts Sir
There is vast difference in Form 26 AS downloaded earlier and now. The deductor is still in the process of filing TDS return pertaining TDS that has been already deducted and the assessee cannot take the credit of it due to non reflection of same in 26 AS.
In view of forgoing details so lucidly explained and on the basis of natural justice at least it should coincide with tax audit dates i.e. 30 the September…
It is ill fated we the Pensioners of SBI have not till yet Form 16 Part A and Part B, not only that more of the customers and retired staffs have not till yet received Form 16A Fourth quarter TDS certificate till date. Everyday customers moving to the to get all these documents to submit IT return. When 234 F have inserted in the act on 2017 there should be one provision, deductors should also be punished for non timely placed of these valid documents for I T return and in such a case , the Tax payer should not be or will be declared as faulty.
Agreed with the facts.
I do agree with the imitative its a good steps by KSCAA i welcome to the Association
gk5035395@gmail.cm
Why do you want extension. Can you get extension for September returns, if not, then we should not press for extension as it will curtail time for audit cases, which, of course are more important for CAs.
THERE ARE SO MANY AMENDMENTS IN THE RETURN FORMS IN THE MONTH OF JUNE ALSO, THIS HAS TO BE DONE BEFORE STARTING OF THE FINANCIAL YEAR. I DO NOT UNDERSTAND HOW CAN A COMMON MAN CAN FILE HIS RETURN WITHOUT AUDITOR’S HELP.
I also fully agree, It is fact that 26AS is made available in the last week of June.18 only and some cases TDS full amount not reflecting in 26AS even they submitted in time. I agree with this representation.
YES, I AGREE . AS GOVT HAS ISSUED ITR FORMS VERY LATE . IT SHOULD BE ISSUED BY 1ST APRIL.
I fully agree with the proposal. And levying of late fee is also not good proposition as there is also provision for charging interest on the tax that is due. The middle income group people will be affected a lot as they will not be having their own accounting staff even to finalize their yearly account let alone the talk of finalizing the returns. The tax payers should also be vigilant in bringing before the govt their genuine problems in filing the returns and also in filing the same before due date.
Agreed with the facts.
Fully agreed..Infact form 26as is made available only in the last week of june.
Fully agree with the Contents and View Expressed
I fully agree with this representation. I fell to understand why govt. authorities set the due realistic dates keeping in mind due dates under other acts.
Why do you want extension. Can you get extension for September returns, if not, then we should not press for extension as it will curtail time for audit cases, which, of course are more important for CAs.
GREAT JOB ……!!!!
yes
I agree
this is a good initiative
Regards
S A AGARWAL
8858500286