Can the penalty levied u/s 234F be waived?

The imposition of fees under Section 234F of the Income Tax Act is mandatory and cannot be waived by the income tax authorities. However, taxpayers may submit a request for condonation to the Income Tax Department, outlining the unavoidable circumstances that led to the delay in filing their Income Tax Return (ITR). Such a request may be considered if the reason provided is deemed genuine.

What is the difference between sections 234A and 234F?

Section 234A of the Income Tax Act imposes interest for late filing of income tax returns, calculated at 1% per month on the outstanding tax amount. On the other hand, section 234F of the Income Tax Act imposes a flat fee for late filing of income tax returns, with the fee amount depending on how late the return is filed.

Does section 234F impose a penalty or interest?

Section 234F of the Income Tax Act imposes a fee, not interest, on taxpayers for late filing of the ITR. It is a fixed penalty for late filing of the Income Tax Returns. The fee depends on how late the return is filed and is separate from any interest charges under section 234A, which are calculated based on the outstanding tax amount.

Is 234F applicable for defective returns?

No, section 234F is not specifically applicable to defective returns. Section 234F imposes a fee for late filing of income tax returns. However, if a defective return (under Section 139(9)) is not corrected and leads to a delay in filing a proper return beyond the due date, then Section 234F may become applicable for late filing. This is because a defective return not filed before the given timeline is considered not filed at all from the original due date.

Is there an exemption for senior citizens from the fees under section 234F?

No, there is no exemption for senior citizens from the fees under section 234F. All taxpayers, including senior citizens, are subject to late filing fees if they fail to file their income tax returns by the due date.

What is the difference between Sec 234F & Sec 234E of the Income Tax Act?

Section 234F imposes a penalty for late filing of income tax returns, with a fee based on how late the return is filed. Section 234E, on the other hand, deals with a fee for delay in filing TDS (Tax Deducted at Source) returns.

What are the charges for filing an income tax return?

Filing your Income Tax Return (ITR) directly through the official Income Tax Department’s website is generally free. However, if you use tax preparation software or hire a tax consultant, there may be associated fees. Additionally, late filing fees under section 234F may apply if the return is not filed by the due date.

How can I avoid 234F penalty?

To avoid the late fee under Section 234F of the Income Tax Act, ensure you file your income tax return on time for the applicable assessment year. If you miss the deadline, you still have the option to submit a belated return by December 31st of the relevant assessment year.

Section 234F of Income Tax Act - Latest Update 2024

3 mins read

13-November-2024

Under Section 234F of the Income Tax Act, taxpayers are required to pay a penalty for late filing of their income tax returns (ITR). Simply put, if you miss the current year’s deadline, you could face a penalty of up to Rs. 5,000.

Previously, the Assessing Officer had discretion in determining the penalty amount. However, the current regulations mandate that the penalty be paid prior to filing the return.

As a taxpayer, it is important to know the provisions of section 234F to avoid late ITR penalties and ensure effective taxation compliance.

This blog will help you understand what section 234F of the Income Tax Act and other factors is affecting your tax liability under it.

What is 234F of the Income Tax Act?

Section 234F is a section included in the Income Tax Act 1961 that deals with levying monetary penalties on taxpayers who fail to file their Income Tax Returns before the due date. The Indian government and the Income Tax Department set a due date every year for taxpayers to file their Income Tax Returns. The date is generally 31st July, but the Income Tax Department may extend the deadline in some cases. Under section 234F of the Income Tax Act, every taxpayer is liable to pay a penalty of up to Rs. 5,000 if they have not filed their ITR by 31st December of the assessment year. However, this penalty may be extended depending on the delay in filing the ITR.

The Income Tax Act's Section 234F mandates that taxpayers who miss the July 31st deadline for filing their Income Tax Returns (ITRs) face penalties. This financial consequence aims to encourage timely tax compliance. The penalty amount can reach a maximum of Rs. 5,000, highlighting the importance of adhering to the stipulated filing schedule.

Also read about: What is direct tax code

Late fee penalty

Under section 234F of the Income Tax Act, taxpayers must deposit a penalty to the Income Tax Department in case of failure to file a timely ITR. Here are the late fee penalties under section 234F of the Income Tax Act:

If a taxpayer's total income is above Rs. 5 lakh they are liable to pay a penalty of Rs. 5,000 if they file their ITR after the due date but before 31 December of the same assessment year.

If a taxpayer's total income is below Rs. 5 lakh, they are liable to pay a reduced penalty of Rs. 1,000 if they file their ITR after the due date.

Taxpayers who file their ITR after 31 December are liable to pay an increased penalty of Rs. 10,000. This is subject to the taxpayer's total income being higher than Rs. 5 lakh.

No penalty is required to be paid by taxpayers for late filing of ITR if their total income is lower than Rs. 2.5 lakh.

Scope of section 234F

The Indian government and the Income Tax Department mandate that all taxpayers must file their ITRs before the due date. In case of failure, they are liable to pay a penalty of at least Rs. 1,000, depending on their total income. The penalty can be increased to Rs. 10,000 for further delays under section 234F of the Income Tax Act. Below are the taxpayers and entities that are eligible for paying the penalty under section 234F in case of late filing of ITR:

Individuals

Firms

Companies

Association of Persons (AOPs)

Also read about: Difference Between Income Tax Act and Direct Tax Code

Penalty before section 234F

Filing of ITR is compulsory under the various sections of the Income Tax Act 1961, as the Indian government wants to ensure that the money earned is taxed and is not used for illicit purposes. Prior to the introduction of section 234F in the Income Tax Act 1961, taxpayers who failed to file their ITRs before the due date were penalised at a flat rate under the provisions of section 271F of the Income Tax Act. Under this section, the penalty was the highest of Rs. 5,000.

However, the Indian government removed section 271F and introduced a new section named section 234F in the Income Tax Act in 2018-19. Now, under the provisions of section 234F, taxpayers are liable to pay several penalties. If the return is filed after the due date but before December 31 of the assessment year, the penalty is Rs. 5,000. If the return is filed after December 31, the penalty increases to Rs. 10,000. However, for taxpayers with a total income of up to Rs. 5 lakh, the penalty is capped at Rs. 1,000, regardless of when the return is filed after the due date.

Who does section 234F apply to

Section 234F of the Income Tax Act applies to the following entities:

Individuals with taxable income in India
Companies
Firms
Associations of Persons (AOPs)
Hindu Undivided Families (HUFs)

Why should you file your returns?

Timely submission of income tax returns offers several advantages beyond avoiding hefty penalties. For individuals seeking international travel, regular tax filings can streamline visa applications. Many embassies and consulates consider an applicant's tax compliance history as a positive indicator.

Similarly, financial institutions often evaluate tax returns during loan processing. Consistent tax filings can enhance credibility and improve the chances of securing loans at favourable terms. Moreover, for taxpayers who have overpaid their taxes, timely filing facilitates a refund claim. Additionally, individuals with past losses can carry forward those deductions for future tax benefits only if they maintain regular tax compliance.

Failure to meet the income tax return filing deadline results in financial penalties. As per Section 234F of the Income Tax Act, taxpayers who miss the December 31st deadline but file before the following year's December 31st are subject to a fine of up to Rs. 5,000. If the return is filed after July 31st, the penalty increases to Rs. 5,000, a rule effective from April 1, 2017.

However, taxpayers with an annual income below Rs. 5,00,000 are eligible for a reduced penalty of Rs. 1,000 for missing both deadlines. The specific penalty amount under Section 234F is calculated based on the duration of the delay.

Section 234F was introduced in the Income Tax Act, 1961 to enforce timely tax return filing and discourage non-compliance.

Also read about: What is an inheritance tax

Mandatory requirement for ITR filing

Taxpayers are liable to file their Income Tax Returns in the following cases:

Income exceeding the basic exemption limit

If your income is higher than the basic exemption limit, you must file an ITR. The basic exemption limit under the old tax regime is Rs. 2.5 lakh and Rs. 3 lakh in the new regime.

Age-specific criteria: You need to file an ITR if your income is above Rs. 2.5 lakh, and you are below 60 years of age. The basic exemption limit for senior citizens (over 60 years of age) is Rs. 3 lakh, and for super senior citizens (over 80 years of age), it is Rs. 5 lakh. The limits for individuals aged above 60 and 80 were increased in the Union Budget 2023.

Under the old tax regime, the basic exemption limit is calculated without considering deductions from capital gains under sections 54, 54B, 54D, 54EC, 54F, 54G, 54GA, or 54GB or deductions under sections 80C to 80U. Furthermore, individuals opting for the new tax regime introduced in Budget 2020 are not allowed to avail themselves of the above-mentioned deductions and certain other exemptions. The new tax regime offers lower tax rates but disallows most deductions and exemptions that are available under the old tax regime.

Assets abroad and foreign accounts: If you possess any asset or financial interest outside India or if they have signing authority in foreign accounts, you must file an ITR.

Bank deposits: If you have a bank deposit in your current account equal to or higher than Rs. 1 core, you must file an ITR.

International travel expenses: If you have spent more than Rs. 2 lakh on your international travel during the previous year, you are required to file an ITR.

Power consumption: If you have spent more than Rs. 1 lakh on power consumption in the previous year, it is mandatory to file an ITR.

Professional gross receipts: You must file an ITR if you are a professional and your gross receipts from your profession have exceeded Rs. 10 lakh in the previous year.

TDS and TCS threshold: If you are below the age of 60 and your TDS and TCS amount was Rs. 25,000 or more during the previous year. The TDS and TCS threshold is 50,000 for senior citizens above the age of 60.

Business turnover: If your business has exceeded an annual turnover of Rs. 60 lakh in the previous year, you are liable to file an ITR.

High savings bank deposits: If your total deposits in one or multiple savings bank accounts have exceeded Rs. 50 lakh, you are required to file an ITR.

If you fail to file an ITR before the due date, you will be liable for a penalty of a minimum of Rs. 1,000 and a maximum of Rs. 10,000 under section 234F of the Income Tax Act.

Section 234F of the Income Tax Applicability

Section 234F of the Income Tax Act is applicable if a taxpayer has failed to file the ITR before the due date set by the Income Tax Department. The penalty is a minimum of Rs. 1,000 and a maximum of Rs. 10,000 based on the total income and the number of days of delay in filing the ITR. If you have failed to file an ITR before the due date, you must pay the penalty using Challan No. 280. You must complete the following steps to pay the penalty using Challan No. 280 under section 234F of the Income Tax Act:

Assessment year: Indicate the applicable assessment year.

PAN: Enter the Permanent Account Number (PAN) in the space where the PAN number is required.

Name and address: Provide your full name and residential address in the relevant sections.

Contact details: Enter your phone number for further communication purposes.

Tax type: Select the relevant tax type from the following types:

Advance tax

Surcharge

Tax on regular assessment

Self-assessment tax

Tax on distributed profits of domestic companies

Tax on distributed income to unit holders

Payment details: Fill in your payment details and choose the mode of payment.

Bank information: Enter the date of payment and the bank and branch name where you are making the payment.

Signature: Attach your signature at the time of making the payment.

Counterfoil details: Enter the details as per the form in the counterfoil section, including assessment year, PAN, bank and branch name, etc.

Also read about: What is dearness allowance

How do you avoid paying the fees under section 234F to the Income Tax Department?

To ensure compliance with income tax regulations and avoid penalties, taxpayers should prioritize timely submission of their Income Tax Returns (ITRs). The following guidelines outline effective strategies to mitigate the risk of late filing fees:

Adhere to due dates: Strictly adhere to the prescribed due dates for ITR filing, which typically coincide with July 31st of the assessment year for individual taxpayers.
Stay informed: Regularly monitor updates and announcements from the Income Tax Department regarding due date changes or extensions.
Understand tax regulations: Maintain a thorough understanding of the latest tax regulations, including any modifications to late filing fees or filing procedures.
Leverage electronic filing: Utilize the convenience and efficiency of electronic filing (e-filing) to expedite the submission process.
Organise financial documentation: Gather and organise all necessary financial documents well in advance to streamline the filing process.
Seek professional guidance: Consult with a tax professional for complex financial situations or to ensure accurate and timely compliance.
Utilise reminders: Implement reminders or digital tools to stay informed about upcoming tax deadlines.
Consider advance tax payments: For significant income not subject to Tax Deducted at Source (TDS), make advance tax payments to avoid a large tax burden at the end of the financial year.
Plan for contingencies: Anticipate potential challenges that could delay filing and plan accordingly to ensure timely submission.

By diligently following these guidelines, taxpayers can significantly reduce the likelihood of incurring late filing penalties under Section 234F.

What is the fine for late filing of ITR under section 234F of the Income Tax Act?

Late filing fees under Section 234F

Total income exceeding Rs. 5,00,000: If the return is filed after the due date, a fee of Rs. 5,000 will be applicable.
Total income less than or equal to Rs. 5,00,000: If the return is filed after the due date, a fee of Rs. 1,000 will be applicable.
Total income not exceeding the exemption limit: No late filing fee will be applicable.

Example

Mr. A, a super senior citizen, has a Gross Total Income of Rs. 4,95,000 for the Financial Year 2021-22. If he files a late return, no late filing fee under Section 234F will be levied, as his income does not exceed the basic exemption limit.

Late filing fee calculation

Total income	Return filing date	Amount of fees	Reason
Rs. 3,40,000	30/06/2023	N/A	Return filed before due date
Rs. 2,20,000	31/07/2023	N/A	Income below Rs. 2.5 lakh
Rs. 4,00,000	Not filed	Rs. 1,000	Income below Rs. 5 lakh
Rs. 8,50,000	15/11/2023	Rs. 5,000	Income above Rs. 5 lakh

How to file Challan No. 280 to pay the 234F fees?

Challan No. 280 is the prescribed form for paying penalties arising from the non-filing or late filing of Income Tax Returns (ITRs). To successfully complete the payment process, taxpayers are required to follow the outlined steps:

Assessment year and tax type: Clearly specify the relevant Assessment Year and select the appropriate tax type (e.g., corporate tax, individual tax).
PAN (Permanent Account Number): Enter the PAN number as per the records.
Assessee information: Provide the full name and residential address of the taxpayer.
Contact details: Include a valid phone number for communication purposes.
Tax type selection: Choose the applicable tax type from the available options, such as Advance Tax, Surcharge, Self-Assessment Tax, etc.
Payment details: Accurately enter the payment amount and other relevant financial information.
Bank information: Specify the date of payment, bank name, and branch details.
Signature: Sign the challan in the designated space.
Counterfoil details: Ensure that the counterfoil section is filled out correctly, including PAN, bank details, assessment year, and other pertinent information.

By adhering to these guidelines, taxpayers can effectively remit income tax penalties using Challan No. 280. It is recommended to retain a copy of the counterfoil for future reference. For any queries or clarifications, consulting with a tax professional or referring to the latest tax department guidelines is advisable.

Is 234F a fee or a penalty?

Per the Income Tax Act, the amount levied under Section 234F is correctly referred to as a 'late fee.' However, there is a common misconception that this amount is a 'penalty.' It's important to note that this distinction is crucial, as a late fee is a mandatory charge applied automatically after the due date, whereas a penalty is discretionary and imposed by the assessing officer. The late fee under Section 234F is a fixed amount, applied regardless of the taxpayer's intent or circumstances.

Conclusion

The Indian government and the Income Tax Department press heavily on the process of filing ITRs. They mandate that every earning individual or entity must file an ITR before the due date, which is generally the 31st of July of every year. However, if taxpayers fail to file their ITRs before the due date, the prisons of section 234F of the Income Tax Act start to apply. The provisions mandate that the taxpayer must pay a penalty of a minimum amount of Rs. 1,000 and a maximum amount of Rs. 10,000, depending on the delayed time and the total income. Hence, it is vital that you ensure timely filing of your ITR to avoid penalties under section 234F of the Income Tax Act 1961.

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