Under the regime of the present Central Government which has tried to make the things digitalized to the extent possible, it has also emphasized on timely compliance for the taxpayers.
From the Assessment Year 2018-19, the legislature has levied the fees for filing Income Tax Return after the due date.
We have tried here to summarise the current late fees provisions as compared to earlier penalty provisions along with the quantum and the justification of insertion of new section under the Income Tax Act.
Under the Income Tax Act, 1961, Section 271F was there (For filing of return on or before 31st Day of March, 2018) which levies the penalty of a sum of five thousand rupees (Rs. 5000/-) for failure to furnish the return of income.
However, there are very rare instances where the provisions of Section 271F was used.
The reason is simple that to levy penalty, there must be show-cause notice to be given to the taxpayer and the principle of natural justice is to be followed.
Looking into this, the legislature has come out with a way of levying the fees for belated compliance instead of levying the penalty so that no show cause notice is required to be served nor is principle of natural justice to be followed.
So, what has been made applicable now is that where Return of income required to be furnished for any assessment year commencing on or after the 1st day of April, 2018, there will be levying of fees for filing return of income after due date by way of insertion of Section 234F in the Income Tax Act.
Kindly understand the difference between the same that Section 234F will levy the fees for late filing of return as against the levy of penalty by Section 271F.
Therefore, in our view, there is no requirement to issue show cause notice and principle of natural justice is to be followed for levying the fees by way of Section 234F of the Act.
If you understand the same in other way round that,
the persons who are the taxpayers under the GST regime might have observed that if they delay in filing Form GSTR 3B, then unless the late fees for the same is paid, the return cannot be filed. However, you might not have faced such situation while filing of VAT and CST Returns.
The reason for the same is same as above that under the erstwhile VAT regime, there was penalty for late filing, while under the current GST regime, there is fees for late filing and not the penalty.
Hope, the same is now clear to you.
The quantum of fees for late filing of return is as below:
- If the total income of the person does not exceed five lakhs rupees, the fees payable shall not exceed Rs. 1000/-.
- If the total income of the person exceeds five lakhs rupees, the fees payable shall be
a) if the return is furnished on or before the 31st day of December of the assessment year – Rs. 5000/-
b) In other cases – Rs. 10,000/-.
The bare provisions of Section 234F and 271F of the Income Tax Act,1961 are produced herewith for your reference purpose:
“234F. Fees for default in furnishing return of income.—(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 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.”.
Penalty for failure to furnish return of income.
271F. If a person who is required to furnish a return of his income, as required under sub-section (1) of section 139 or by the provisos to that sub-section, fails to furnish such return before the end of the relevant assessment year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of five thousand rupees:
[Provided that nothing contained in this section shall apply to and in relation to the return of income required to be furnished for any assessment year commencing on or after the 1st day of April, 2018.]
Now, the next question will arise that what are the chances of actually levying the fees even though it is enacted in the act.
Believe us friends, there are cent percentage chances that the fees for late filing of return will be levied and if not paid by the taxpayer himself, the same will be raised be way of demand at the time of issue of intimation u/s 143(1) of the Income Tax Act, 1961.
Therefore, it is requested to file your Income Tax Return in time only.
We have written a separate blog for the Amendments made by Union Budget 2017 and 2018. You may refer to the blog of the same under the group Union Budget for detailed information.