Penalty for filing Income Tax Return after due date (Section 234F)

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With the last budget presented by Finance Minister Shree Arun Jaitley in February, a new section 234F has been inserted in the Income Tax Act. As per this section, an individual would have to pay a fee of up to Rs 10,000 for filing income tax return after the due dates specified in section 139(1) of the Act.

However, this fee is applicable with effect from April 1, 2018 and will not apply for returns filed for FY 2016-17 for which the deadline is July 31, 2017.

The fee to be levied is based on the time period of delay which is as follows:

(i) A fee of Rs 5,000 in case returns are filed after the due date but before the December 31 of the relevant assessment year or

(ii) Rs. 10,000 in case it is filed after December 31 of the relevant assessment year.

As a relief to the taxpayers earning not more than Rs 5 lakh in previous year, the maximum penalty will be Rs. 1000.

This penalty will be applicable from assessment year April 1, 2018 and onwards and therefore apply to returns filed after this date. This means that all income tax returns to be filed for the financial year 2016-17 or assessment year 2017- 18 and before will not come under the purview of this section.

Currently, section 271F allows an assessing officer at his sole discretion to levy penalty of Rs 5,000 only if an individual fails to file his/her return before the end of relevant assessment year. This section will not be applicable from assessment year 2018-19 and thereafter but will be applicable for returns filed for FY2016-17 and before.

However, the current provisions of section 234A will still be applicable along with the newly introduced fees. According to Section 234A, simple interest is levied at the rate of 1% per month or part of it on any tax amount if not paid within due dates.