Penalty for Late Filing of Income Tax Return for FY 2023-24: 234F of Income Tax Act
Updated: Oct 1
On-time filing of the income tax return is essential for every taxpayer in India. Apart from late filing charges, delayed filing has multiple consequences and other inconveniences. Through this article, an attempt is made to explain the provisions under Section 234F of the Income Tax Act about late filing charges under ITR and also other impacts of delay in filing the same are highlighted.
Table of Content
Penalty for Late Filing of Income Tax Return for FY 2023-24
Under Section 234F of the Income Tax Act, there are penalties if a taxpayer fails to file their ITR on or before the due date. Now, the financial year 2023-24 has scaled down the late filing fee to INR 5,000. This is related to a reduction from the previous maximum fine of INR 10,000. In such cases where total income does not go beyond INR 5 lakh, for small taxpayers, the penalty shall not exceed INR 1,000.
Late Filing Fee Details
Below is the summary of penalty for late filing, which varies based on the income level of the taxpayer:
On or Before 31st July 2024: INR 0 for all income levels
Between 1st August 2024 to 31st December 2024: INR 1,000 for total income below INR 5 lakh; INR 5,000 for total income above INR 5 lakh.
For instance, in the case of income above INR 5 lakh, if the return is filed on 1st September 2024, a penalty of INR 5,000 will be charged to the taxpayer.
Reduced Time for Revising Your Return
The time to revise the filed ITR has also been drastically cut down. One had as long as two years to revise the return. However, under the revised rules, this time is now nine months from the end of the financial year. Thus, the deadline for revising the ITR for the assessment year 2024-25 is 31st December 2024. This in itself is a strong reason why filing needs to be done early enough to leave sufficient time for corrections.
Penalty for Late Filing of Income Tax Return for FY 2023-24: Interest Implications
Apart from the fines, late filing of ITR involves interest on unpaid taxes by taxpayers. Under Section 234A, interest runs at 1% per month or part of a month on the amount of tax outstanding. Such interest is computed from the day immediately following the due date till the date of payment. Hence, the longer one delays, the more interest will have to be paid.
Under Section 234B, taxpayers who delay paying advance tax or who pay less than 90% of their assessed tax are required to pay the outstanding amount along with interest. The interest is calculated from the end of the relevant financial year (typically March 31st) until the tax liability is fully settled. Specifically, interest penalties apply if there is a delay in the payment of advance tax or if the advance tax is paid, but not in full. Taxpayers need to ensure timely and complete payment to avoid incurring additional interest charges.
Section 234C applies when a taxpayer fails to pay the required interest on the delayed payment of advance tax, as mandated by Section 234B. This section specifically addresses late payments of advance tax installments. For all types of penalties related to delayed income tax returns, a minimum interest rate of 1% is applicable.
Section 271H relates to the failure to file TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) returns by the due date. The penalties for such offenses can range from a minimum of ten thousand rupees to a maximum of one lakh rupees, in addition to a late filing penalty under Section 234E, which amounts to INR 200 per day until the TDS/TCS returns are filed.
Section 270A is relevant in cases of non-filing of income tax returns (ITR) or underreporting of income. Under this section, a penalty of 50% of the total tax payable on the under-reported income may be imposed. These provisions underscore the importance of timely and accurate tax compliance to avoid substantial penalties.
Payment of Interest
Apart from the fines, late filing of ITR involves interest on unpaid tax by taxpayers. Under Section 234A, interest runs at 1 percent per month or part of a month on the amount of tax outstanding. Such interest is computed from the day immediately following the due date till the date of payment. Hence, the longer one delays, the more interest will have to be paid.
Carry Forward of Losses is Not Permitted
In case of losses incurred by taxpayers under any head, like capital gains or business income, filing of returns is essential to carry forward these losses to future years. If the assessees fail to do so, no carry forward of losses is allowed that might have been available to set off against future taxable income. House property losses, however, can be carried forward even in the case of a late filing of the ITR.
Delay in Receiving Refunds
Filing of ITR on time is necessary for processing refunds on excess tax paid. In case it is filed late, then the processing of refunds gets delayed, and it takes a longer time for the money to come back to the taxpayer. Furthermore, the income tax department does not pay any interest on delayed refunds if the return is filed late.
Reasons for Delay in Refund
Refund processing can get delayed on various grounds, such as errors in the return filed, insufficient documents, and mismatches between the return and the TDS. The taxpayers have to ensure all information furnished is correct and complete to avoid delay.
Late ITR Filing Penalty for Individuals with Income Below the Basic Exemption Limit
Typically, only individuals with an income above the basic exemption limit are required to file an Income Tax Return (ITR). However, there are specific situations where individuals must file an ITR even if their annual income falls below this limit. Failing to file in these cases can result in penalties under various sections of tax law.
Here are the conditions that require filing an ITR, regardless of income level:
If your electricity expenses exceed INR 1 lakh.
If you or a family member spends more than INR 2 lakh on foreign travel.
If the deposit is more than INR 1 crore in one or more current accounts with a bank.
If you, as an Indian resident, earn income from foreign assets.
FAQ
Q1. Do I need to file an ITR if my income is below the exemption limit?
No, if your total taxable income for the financial year is below INR 2,50,000, there is no requirement to file an ITR.
Q2. What are the consequences of filing a late ITR?
Late return filing also attracts a penalty under Section 234F and interest on unpaid tax under Section 234A. Further, late filing may delay refunds and disallow the carry forward of certain losses.
Q3. What if I make a mistake in my ITR?
You can revise your ITR to correct mistakes. However, the time available for revisions is now limited to nine months from the end of the financial year.
Q4. Will I still be able to carry forward business losses if I file late?
No, in the case the return is filed after the due date, business or capital losses cannot be carried forward.
Q5. How does late filing impact my tax refund?
Late filing postpones the processing of any refund refundable to you on account of excess tax paid by you.
Q6. Will there be a late filing penalty if my income is below INR 5 lakh?
Yes. However, in such cases the penalty will not exceed INR 1,000.
Q7. What would be the interest rate if tax is not paid on time because of late filing?
1% per month or part of a month on the outstanding amount of tax.
Q8. Can I revise my return after the due date?
Yes, you can revise your return before 31st December of the assessment year or completion of the assessment, whichever is earlier.
Q9. What if I have a tax refund and I have filed ITR late?
Late filing may delay your refund, and you will lose your interest on the delayed refund.
Q10. Are there any exceptions for carrying forward losses if I file late?
Yes, loss from house property can nevertheless be carried forward if you file your ITR late.
Q11. Can we file ITR without late fees?
Yes, individuals whose gross total income is below the basic exemption limit are not required to pay any late fees under Section 234F of the Income Tax Act, even if they file their Income Tax Return (ITR) after the deadline. However, if their income exceeds the basic exemption limit, late fees will be applicable for filing the ITR beyond the due date.
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