Penalty u/s 234F for late filing of income tax return along with some disadvantages

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In this post we will discuss about the various penalties, interest and disadvantages you can face if you file your income tax return after its due date mentioned in 139(1) of the Act i.e. either 31^St July or 30^th September and for A.Y. 2019-20 it’s 31^St August for non-audit case and 31^st October for Audit case and companies.

1. Section 234F: Fee/ penalty for filing income tax return after the due date u/s 139(1):-

In Finance Act 2017 section 234F was inserted in the Income Tax Act w.e.f 01.04.2018 which talks about the penalty for late filing the income tax return or late filing fee of income tax return which is summarized as under:

So under the provisions of section 234F you can face a maximum late filing fee of Rs. 10000 and minimum of Rs. 1000 so it’s better to file your income tax return on time because nowadays notices are generated by system and they won’t skip sending you notice of late filing of your income tax return. Also from the above table you can make out that maximum time you have for filing a return is till 31^St March of the relevant Assessment year.

2. Interest u/s 234A for late filing of return of income:-

Now you not only have to pay late filing fee for filing your income tax return after due date but you also have to interest under section 234A. Section 234A demands for 1% interest for a month or part thereof on the tax payable from the due date of filing return of income till the date return is filed.

However you can save such interest just by paying all the outstanding taxes before the due date of filing return of income. Therefore if you pay your outstanding tax liability in the form of self assessment tax before the due date and file return after due date then also you don’t have to interest u/s 234A of the Act because of a landmark judgement from Hon’ble Delhi High court in case Dr. Prannoy Roy & Arn vs CIT where Hon’ble High court is of the view that if assessee has paid his dues before due date then even if he/she filed the return of income after due date they don’t have to pay interest u/s 234A of the Act. So if you think you won’t be able to file your return of income in time atleast pay all the outstanding taxes before due date to save some interest. (However for A.Y. 2019-20 for audit cases you need to pay taxes before 30^th September, even when due date for filing return of income has been extended to 31^st October, to save interest.)

3. Cannot carry forward losses:

By virtue of section 80 of the Income Tax Act if one filed its return after the due date mentioned u/s 139(1) then they can’t carry forward losses from business income, speculative business income or losses under the head capital gain. However this section doesn’t covers losses from house property and unabsorbed depreciation so it can be carried forward even if the return is filed after the due date.

So you can’t carry forward losses however you can set off the losses in the same year, there is no restriction in that.

4. Cannot claim deduction under heading C of Chapter VI:-

So if you are an industrial undertaking claiming deduction under section 80IA or you are book writer claiming deduction of your royalty income then you need to file your return of income within the time limit or you won’t be able to claim such deduction as deduction covered under heading C of Chapter VI (I.e. deduction from 80IA to 80RRB) are available only when you file your return of income within time. But, you can still claim deduction under section 80C or 80D even if you file your return after due date because they are covered under heading A of Chapter VI. Thus even if you are filing your return of income after due date you can claim deduction of you LIC or mediclaim or deduction of your saving bank interest.

5. Some Other disadvantages of filing ITR after due date:-

Various other disadvantages of filing return of income after due date are that it takes more time for your return to get processed and thus it will take more time for your refund to also get processed. Thus if you are having any refund of income tax refund do file your income tax return in time.

FAQ: Let’s discuss some common FAQ which people have for above mentioned topics:

Q1. Will you be liable to pay late fee even when you have no tax payable i.e. say for example your total income is Rs. 3 lakh and because of rebate your tax payable is zero, so will you be liable to pay late fee?

Ans: Yes you would be liable to pay late fee even when your tax payable is Nil as you were liable to file income tax return and nowadays it’s automatically charged when you file return of income so you don’t have to wait for any notice.

Q2. Will you be liable to pay late fee if your total income is below taxable limit i.e. 2.5 lakh or 3 lakh or 5 lakh whichever applicable?

Ans: No you won’t be liable for late fee if your total income below claiming deduction u/s 80C to 80U is below the exemption limit.

Q3. Can you claim deduction under heading C of Chapter VI in revise return?

Ans: If you have filed the relevant form online for claiming such deduction before the actual due date then you might claim such deduction in revised return as your original return was filed within due date.

Now in the end of this topic let’s talk about an Important change that finance Act 2017 brought regarding belated return i.e. return filed after due date, the important update is that now you can revise belated return as earlier there was no provision to revise belated return but now there has been an amendment u/s 139(5) and now belated return can also be revised.

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