Section 234F

The saying “Better late than never” while can be applied to many situations in life, it becomes tricky when filing or not filing your income tax returns (ITR).

Most of us have a habit of putting off the tax filing work unless it becomes absolutely necessary. For us missing the tax filing deadline only means filing a late return. But, a note of caution for all such people.

From this year onwards you need to be proactive and extra cautious with respect to the filing of your income tax return.

In this post, we have covered each and every aspect of the section 234F. Read carefully to avoid being the victim of section 234F.

What is section 234F?

In Budget 2017 our honorable Finance Minister, Mr. Arun Jaitley introduced a new section 234F to ensure timely filing of income tax returns. As per section 234F, if a person is required to file income tax return (ITR) as per the provisions of income tax law (section 139(1)) but does not file it within the prescribed time limit then late fees have to be deposited by him while filing his ITR. The quantum of fees shall depend upon the time of filing the return and total income.

When is a person mandatorily required to file Income Tax Return?

If a person falls into the below conditions then the person has to mandatorily file their income tax return:

  • If the gross total income (before allowing any deductions under section 80C to 80U) exceeds the basic exemption limit i.e. Rs.2,50,000 (for individuals below 60 years) or Rs. 3,00,000 (for individuals of 60 years and above but less than 80 years old) or Rs. 5,00,000 (for individuals of 80 years and above) as the case may be.
  • If the person holds any asset including financial interest in any entity located outside India OR has signing authority in any account located outside India as a beneficial owner or otherwise.
  • If the person is a beneficiary of any asset located outside India.

What is the prescribed time limit (Due Dates) for filing ITR?

The due dates for filing ITR u/s 139(1) for different category of taxpayers are as below:

Category Due date of filing
Individuals who are not required to be audited 31st July
Company or Individual whose accounts are required to be audited 30th September
Individual who is required to furnish report referred in section 92E 30th November

Who is covered under the scope of 234F?

All persons including Individual, HUF, Company, Firm, AOP etc. will be covered under the scope of Sec 234F. These entities will be liable to pay late filing fees if the return is filed after their respective due dates.

What is the amount of fees that can be levied under 234F by the Income Tax?

The quantum of fees that can be levied u/s 234F is as under :

  1. If the return is furnished after 31st July but on or before the 31st day of December of the assessment year – Rs. 5000 (i.e 31st July 2018 and 31st Dec 2018 for FY 2017-18)
  2. If the return is furnished after 31st December of the assessment year – Rs. 10,000

However, if the Total income i.e. Income after deduction is less than or equal to five lakh rupees, then, in that case, the fee amount shall not exceed Rs. 1000.

Let’s understand the quantum of the fee that would be payable u/s 234 F on the following income and return filing date through an example :

Total Income Return Filing Date Fees u/s 234F
Rs. 3,00,000 5th July 2018 Not Applicable
Rs. 6,00,000 31st July 2018 Not Applicable
Rs. 10,00,000 25th July 2018 Not Applicable
Rs. 25,00,000 10th August 2018 Rs. 5000
Rs. 4,00,000 10th January 2019 Rs. 1000
Rs. 9,00,000 15th October 2018 Rs. 5000
Rs. 4,50,000 13th November 2018 Rs. 1000
Rs. 18,00,000 15th February 2019 Rs. 10000

Section 234F applicability

From which date the provisions of sec 234F shall be effective?

The provisions of this section are made applicable for Income Tax returns being filed for FY 2017-18 (or AY 2018-19). Hence, if we file the return of F.Y 17-18 after 31st July 2018 then fees u/s 234F will become operative. FY 17-18 would be the first year when any such fees would be leviable without the intervention of Assessing Officer.

What was the reason for the introduction of Section 234F?

In view of improving tax compliance, it is important that the returns are filed within the due dates specified in section 139(1). Therefore, section 234F has been inserted in the Income Tax Act. Further, the reduced time limits proposed for the making of an assessment under various sections are also based on pre-requisite that returns are filed on time.

How to pay 234F Fees?

As per Finance Act 2017, Late fees u/s 234F can be paid by the way of Self Assessment Tax u/s 140A. Therefore, through Challan 280, under the head of Self Assessment Tax, the late fees can be paid from F.Y 17-18 and onwards.

Under which section shall the fees under section 234F will be paid if you have missed the deadline for filing ITR?

The fees u/s 234F shall be payable under sec 140A (Self Assessment Tax). An important amendment has been made in section 140A (Self Assessment Tax) to include this section. In case of delay in furnishing of income tax return, along with the tax and interest payable, the fee for delay in furnishing of income tax return shall also be payable.

What was the penalty before section 234F was introduced?

Before the introduction of sec 234F, the penalty for failure to furnish the return of income was leviable under section 271F.

As per this section, if the return is not filed before the end of relevant assessment year then Assessing Officer, at its discretion may levy a penalty up to Rs. 5,000/-. However, this section has been withdrawn from the assessment year 2018-19 and onwards after coming 234F into force.

How to avoid paying the fees under section 234F to the Income Tax Department?

Payment of fee u/s 234F can be avoided by filing the return on time in respect of every assessment year.

Can the late fees u/s 234F be waived of in the genuine cases?

No, fees u/s 234F is mandatorily applicable. Therefore, it cannot be waived off by income tax authority.

Can excess TDS deducted be adjusted from the fees u/s 234F?

Yes, the income tax department will adjust the excess TDS deducted towards the payment of Fees u/s 234F.

Will the impact of amendment under section 234F come on the intimation under section 143(1)?

A consequential amendment in section 143(1) has been done in consonance with the introduction of sec 234F. Hence, the fee payable u/s 234F would also be considered in the computation of amount payable or refund due, as the case may be, on account of processing of the return.

Is 234F a fee or a penalty?

According to the Income Tax Act, the amount payable under sec 234F is termed as late fees. But many of us identify the amount under sec 234F as the penalty instead of fees, which is not the case. The reason being that this fee is steeper in nature in which the assessing officer has no role in deciding its applicability. It automatically applies immediately after the due date.

Section 234F summary, 234f, IT 234f

That brings us to the end of this post. Please comment below and let us know what you think and if you have any questions.

Related: Which ITR should you file?