Understanding Section 234F of Income Tax Act for AY 2020-21
Filing income tax returns on time is mandatory for every taxpayer in India. Failure to do so can attract hefty penalties and interest. To streamline the process and encourage taxpayers to file their returns on time, the government has introduced Section 234F of the Income Tax Act, which came into effect from April 1, 2018. This section pertains to penalties for late filing of income tax returns for the Assessment Year (AY) 2020-21. Let us understand this section in detail.
Applicability of Section 234F
Section 234F applies to individuals, Hindu Undivided Families (HUFs), companies, partnership firms, and any other person liable to file an income tax return under Section 139(1) of the Income Tax Act.
Penalty for Late Filing of Income Tax Returns
As per Section 234F, a taxpayer is liable to pay a penalty of up to Rs 10,000 for late filing of income tax returns. The amount of penalty depends on the time of filing the return. If the return is filed after the due date but before December 31 of the assessment year, the penalty amount will be Rs 5,000. If the return is filed after December 31, the penalty amount will increase to Rs 10,000. However, if the total income of the taxpayer does not exceed Rs 5 lakh, the maximum penalty amount will be Rs 1,000.
Example:
Let’s say, for AY 2020-21, Mr. X, whose total income for the year is Rs 8 lakh, files his income tax return on February 15, 2021, which is after the due date of December 31, 2020. In this case, he will have to pay a penalty of Rs 10,000.
Due Date for Filing Income Tax Returns
The due date for filing income tax returns for the AY 2020-21 was extended due to the COVID-19 pandemic. The revised due dates are as follows:
- July 31, 2020, for taxpayers who are not required to get their accounts audited.
- October 31, 2020, for taxpayers who are required to get their accounts audited.
- January 31, 2021, for taxpayers who are required to furnish a report under Section 92E of the Income Tax Act.
Exceptions to Penalty
There are certain exceptions to the penalty under Section 234F. If the taxpayer has a reasonable cause for filing the return after the due date, the penalty may be waived off or reduced. Some examples of reasonable causes include a medical emergency, natural calamity, or delay caused by the Income Tax Department.
How to Pay the Penalty
If a taxpayer is liable to pay the penalty under Section 234F, they can do so while filing their income tax return. The penalty amount can be paid along with the tax dues for the year. It is important to note that the penalty is non-refundable.
Consequences of Late Filing
Apart from the penalty under Section 234F, there are other consequences of late filing of income tax returns. These include:
- Interest on Tax Dues: If a taxpayer files their income tax return after the due date, they will have to pay interest on the tax dues for the year. The interest rate is 1% per month or part of a month.
- Cannot Carry Forward Losses: If a taxpayer does not file their income tax return within the due date, they will not be able to carry forward any losses incurred during the year. This can result in a higher tax liability for the following year.
- Prosecution: In extreme cases of non-compliance, the Income Tax Department may initiate prosecution proceedings against the taxpayer. This can lead to imprisonment and/or fine.
Late Filing of Revised Return
If a taxpayer files their income tax return after the due date and later realizes that they have made an error or omission in the return, they can file a revised return. However, if the revised return is filed after the due date, it will be considered as late filing and the penalty under Section 234F will apply.
Late Filing of Belated Return
If a taxpayer does not file their income tax return within the due date, they can file a belated return. A belated return can be filed before the end of the assessment year or before the completion of assessment, whichever is earlier. However, if the belated return is filed after the due date but before December 31 of the assessment year, the penalty under Section 234F will apply.
Penalty for Non-Filing of Income Tax Return
Apart from the penalty for late filing of income tax return, there is also a penalty for non-filing of income tax return. If a taxpayer is required to file an income tax return under Section 139(1) of the Income Tax Act but does not do so, they may be liable to pay a penalty of Rs. 5,000. However, if the total income of the taxpayer does not exceed Rs. 5 lakh, the maximum penalty amount will be Rs. 1,000.
Conclusion
Filing income tax returns on time is not only a legal obligation but also a responsible civic duty. Section 234F of the Income Tax Act is a reminder of the importance of timely filing of income tax returns. To avoid penalties, taxpayers should make sure to file their returns within the due date or seek professional help to comply with the regulations.
Read more useful content:
- section 145 of income tax act
- section 10e of income tax act
- section 9 of the income tax act
- section 94b of income tax act
- section 206aa of income tax act
Frequently Asked Questions (FAQs)
What is Section 234F of the Income Tax Act?
Answer: Section 234F of the Income Tax Act is a provision that levies a penalty for late filing of income tax returns.
When does the penalty under Section 234F apply?
Answer: The penalty under Section 234F applies when a taxpayer files their income tax return after the due date.
How much is the penalty under Section 234F?
Answer: The penalty under Section 234F can be up to Rs. 10,000, depending on the delay in filing the income tax return.
Is the penalty under Section 234F applicable to all taxpayers?
Answer: Yes, the penalty under Section 234F is applicable to all taxpayers, including individuals, HUFs, companies, and other entities.
Is there any exemption to the penalty under Section 234F?
Answer: Yes, there are certain exceptions to the penalty under Section 234F, such as a medical emergency, natural calamity, or delay caused by the Income Tax Department.
Can the penalty under Section 234F be waived off or reduced?
Answer: Yes, if a taxpayer has a reasonable cause for late filing of income tax return, the penalty may be waived off or reduced.
How can the penalty under Section 234F be paid?
Answer: The penalty under Section 234F can be paid while filing the income tax return. The penalty amount can be paid along with the tax dues for the year.
Are there any other consequences of late filing of income tax return?
Answer: Yes, apart from the penalty under Section 234F, there are other consequences of late filing of income tax return, such as interest on tax dues, inability to carry forward losses, and prosecution.
Can a taxpayer file a revised return after the due date without attracting the penalty under Section 234F?
Answer: No, if a taxpayer files a revised return after the due date, it will be considered as late filing and the penalty under Section 234F will apply.
What is the penalty for non-filing of income tax return?
Answer: If a taxpayer is required to file an income tax return under Section 139(1) of the Income Tax Act but does not do so, they may be liable to pay a penalty of Rs. 5,000 or Rs. 1,000, depending on their total income.
