Penalty u/s. 234F for delayed filing of IT Return applicable from FY 2017-18

• Penalty leviable u/s 234F will be applicable for FY 2017-18 (i.e. AY 2018-19).
• New section 234F was proposed in The Finance Bill, 2017. which is now effective from 1st day of April, 2018.
• This section 234F is inserted after section 234E in the Income-tax Act,1961.
• The above proposal was made with a view to ensure that returns of income are furnished within the due dates specified in section 139(1). Delay in filing of return is in contravention of law for which penalty should be attracted.
• Section 234F relates to penalty/fees for default in furnishing return of income.This will be applicable from Assessment year 2018-19 and not Assessment year 2017-18.
• Due date for filing/furnishing return of income are given under section 139(1) of the Income Tax Act,1961. If a person does not furnish his return of income within the prescribed due date penalty/fees will be charged.
•  For the assessees whose total income exceeds  five lakh rupees, the fees/penalty to be levied will be based on the time period of delay which is as follows :
  • If return is filed between after the due date (31st July) but before the 31st December of the relevant assessment year then penalty/fees of Rs. 5,000/- will be levied.
  • If return is filed after 31st December but before 31^st March of the relevant assessment year then penalty/fees of Rs. 10,000/- will be levied.
• For the assessees whose total income does not exceed  five lakh rupees the fees/penalty payable under this section shall not exceed one thousand rupees.

Penalty u/s. 234F for delayed filing of IT Return applicable from FY 2017-18:

Other information relating to section 234F

• The provisions u/s. 234F will not be applicable for returns filed for financial year 2016-17 and before. As the section will be inserted from 1st April,2018.
• However, if there is delay in return filing then penalty/fees proposed u/s. 234F will be leviable  irrespective of  all the taxes have been paid through tds or advance Tax  by the assessee.
• The provisions of section 234F will be attracted if return filing is delayed, it is of no relevance whether assessee is to pay tax or to claim refund  in his return of income.
• This fees/penalty u/s 234F needs to be paid along with the self-assessment tax.

Section 234A

• The provisions of section 234A will  continue to be applicable as before. Introduction of new section 234F  will not have any impact. As per section 234A, if the tax amount is not paid within the stipulated due dates then simple interest is levied at the rate of 1% per month or part of it on unpaid amount of tax  due.
• The interest u/s. 234A will be payable for the period starting from due date of filing return till the date the return is filed.
• In case the return of income 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.

Section 271F 

• In the current scenario, Section 271F gives Assessing officer power to levy penalty if an individual fails to file his/her return before the end of relevant assessment year at his sole discretion.
• The maximum penalty u/s 271F is Rs. 5,000/- only.
• This section will not be applicable from assessment year 2018-19  as new section 234F will be applicable which mandatorily levies fees/penalty for late filing of return of income as discussed above.
•  But still section 271F will continue to be applicable for returns filed for assessment year 2017-18 and before.