Section 234F is the new buzz!
If you are an Income Tax assessee, then by this time you must have been receiving reminders almost daily in your Cell phone as well as in your mailbox from the Income Tax department itself, reminding you to file your Income Tax Returns on time in order to avoid levy of late fess under section 234F.
However CBDT, has extended the Return Filing date by one month, hence Assessees who were required to file their returns by the 31st day of July can now file their returns by 31st Aug 2018 for Assessment Year 2018-19.
There is no change in the due dates for Assessees who are required to get their accounts audited under section 44AB of the Income Tax Act. The due date remains as 30th September unless further notified for Assessment Year 2018-19.
Back to our discussion on Section 234F.
The Finance Ministry has introduced the concept of late fee and shall be applicable to those assessees who do not file their Income Tax Return on time i.e. within the stipulated due dates. Not filing tax returns at all will attract interest and penalties in addition to late fess u/s 234F
The intention behind introducing section 234F is to promote timely filing of Income Tax Returns and make the economy more tax compliant.
With the introduction of 234F, a few changes have been made in other sections of the Income Tax Act as well as in the Income Tax Return forms itself.
Section 271F, has been withdrawn from Assessment year 2018-19 onwards. As per this section if the Income Tax return was not filed before the end of the relevant assessment year then the assessing officer, at its discretion may levy a penalty amounting to Rs. 5000/-
Here there is no exemption from section 234F to any class of assessee. It cannot be waived off either by any Income Tax authority as well. The only way to avoid 234F is to file your Income Tax Returns within the stipulated due dates.
Section 234F is applicable for Tax Returns filed for Assessment year commencing on or after 01st April 2018.
If an assessee fails to file the Income Tax Return within the stipulated time period, the assesse shall be liable for payment of late fee under section 234F. The late fee ranges between Rs.1000-Rs.10000.
This late fee can be paid in the form of Self-Assessment Tax u/s 140A.
Alternatively, if an assessee has a situation of Refund of Taxes, the department will adjust in payment of Fees under section 234F. The department will first adjust the fees and then the interest (if any) form the refund amount.
It is important to understand that, Section 234F has nothing to do with your Tax liability.
Consequential amendment has been made in section 143(1) i.e provisional assessment. Fee payable u/s 234F would also be considered in computation of amount payable or refund due as the case may be on account of processing of return.
Let’s have a look at what the bare act states
234F. (1) Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of the said section, he shall pay, by way of fee, a sum of,—
(a) five thousand rupees, if the return is furnished on or before the 31st day of December of the assessment year;
(b) ten thousand rupees in any other case:
Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.
(2) The provisions of this section shall apply in respect of return of income required to be furnished for the assessment year commencing on or after the 1st day of April, 2018.]
In the Act above, it is mentioned “..where a person required to furnish a return of income under section 139..”
It is worth noting that – Where a person is having income below the maximum exemption limit he is not required to file his return of Income in the first place. Even if such assessee, voluntarily files his return of Income section, 234F is not applicable.
Let us assume that Mr A is an Individual and has a Gross Total Income of Rs. 2, 49,000. Mr A files his Return of Income on 31st Dec 2018. Section 234F will not be applicable to him.
The point under consideration is, how does an assessee ascertain whether he is required to furnish return of income or not?
As per Section 139 of the Income Tax act on “Return of income”.
139. (1) Every person,—
(a) being a company or a firm; or
(b) being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax,
shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.
Some other points worth noting are-
1.Total Income means Income which is computed after subtracting all deductions from the Gross Total Income and Gross Total Income is the total of all the five heads of Income.
2. If the Total income ie Gross Total Income minus deductions is less than or equal to Rs. 5 lacs, the maximum fee u/s 234F in that case will be limited to Rs.1000.
3. But where the Total Income is more than 5 Lakhs and the return is filed after the stipulated due date but before 31st day of December, the minimum fee payable u/s 234F is Rs. 5,000/- and where the return is filed after 31st December fee payable u/s 234F would be Rs.10,000/.
4. Fee payable u/s 234F is in addition to Interest u/s 234A, 234B, 234C
5. Time Prescribed for filing the returns is 31st July for Non Audit assesses and 30th September for the Assessees who are required to get their accounts audited u/s 44AB of the Income Tax Act.
By now you have an in-depth idea on section 234 F.
Arrange your papers, file them, plan a schedule with your Tax Consultant & get your returns filed on time.
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