A new section 234F has been inserted by the government in the Income Tax Act. As per this section, an individual would have to pay a fee of up to Rs 10,000 (maximum) for filing income tax return after the due dates specified in section 139(1) of the Act.
The fee to be levied is based on the time period of delay which is as follows:
- 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
- Rs. 10,000 in case it is filed after December 31 of the relevant assessment year.
However, as a relief to the taxpayers earning less than Rs 5 lakh the maximum penalty will be Rs. 1000.
Penalty for filing income tax return after due date is only applicable from FY 2017-18
i.e. 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.
For the purpose of filing income tax returns, financial year (FY) refers to the year in which you have earned the income through various sources such as salary, rent etc.
The financial year immediately following the above mentioned year is the assessment year for the preceding FY.
You are required as per income tax rules to file your income tax returns for the income earned in a financial year in the related assessment year.
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.
This interest will be payable for the period starting from due date of filing return till the date the return is filed. In case the return has not been filed at all then interest will be calculated from the due date till the date of completion of assessment order passed by the assessing officer.
However, the amount already paid via advance tax or TDS will be subtracted from the total tax payable plus interest along with the fees, applicable from April 1, 2018, as per section 140A of the Act.
If you have claimed a refund in your return which is filed after due date even then, fees provision will be applicable under section 234F.
Since all the new changes will be applicable from assessment year 2018-19 and onwards so even if you have missed the deadlines for earlier income tax returns, the penalty of maximum of Rs 10,000 will not be applicable.