Finance Act 2017 introduced section 234F in lieu of section 271F w.e.f. A/Y 2018-19 to provide mandatory late fee for default in furnishing return of income before specified due dates provided under section 139(1). This amendment is an effective tool to enforce better compliance in view of its mandatory nature which takes away the discretion of Assessing Officer to impose or not to impose the penalty.
Persons liable to pay late fees
a) Any firm or company and LLP irrespective of the quantum of income. It is applicable even if the income is NIL.
b) Any Individual or HUF if total income exceeds the maximum amount which is not chargeable to income tax before giving deductions under Chapter VI A.
c) All assesses for carry forward of losses as specified U/S 139(3) of the I.T. Act.
d) All assesses covered U/S 139(4A), 139(4B), 139(4C), 139(4D) mainly covering Charitable Religious Institutions, Political Parties, and Educational/Medical Institutions if the gross receipts exceed the amount not chargeable to income tax.
Due Dates of filing return of Income
The due dates for filing return of income have been provided in explanation 2 of section 139(1) which are as under:-
(a) Where the assessee is
(i) A company or
(ii) A person (other than a company) whose accounts are required to be audited under this Act or under any law for the time being in force; or
(iii) A working partner of a firm whose accounts are required to be audited under this Act or under any law for the time being in force, the (30th day of September) of the assessment year
(iv) In the case of any other assessee, the 31st day of July of the assessment year.
Quantum of Fees
- Nil – if total income is below taxable limit except loss return U/S 139(3).
- 1000/- if total income is below Rs. 500000/- i.e. gross total income less deductions Under Chapter VI A.
- 5000/- if total income exceeds Rs. 500000/- and return is furnished up to 31st December.
- 10000/- if total income exceeds Rs. 500000/- and return is furnished after 31st of December and non-filing of return.
The default in furnishing the return of income before the due date has been further made punishable by way of disallowing the deductions under heading C of Chapter VI A i.e. deduction in respect of certain incomes. This amendment has been made by substituting section 80AC in Finance Act 2018.
The Professionals as well as the assesses will be under great stress to file the returns in the stipulated time and both of them will have to burn midnight oil to save the late fees and to avail the deduction under heading C of Chapter VI A.
(Author is President, Patiala Tax Bar Association and Vice President, Punjab Tax Bar Association)