Section 234F -Fee (Penalty) for delay in filing Income-tax return

We keep hearing about the tax return filing deadline, which for the current AY 2024-25 (FY 2023-24) is 31st July. But what exactly is tax return filing and who should be bothered about the same? As per the existing laws, any individual who earns more than the minimum threshold set by the government at INR 2,50,000 must pay applicable taxes. 

As a responsible citizen, you are expected to file your tax returns at the end of a fiscal year. The tax return is essentially a form in which a taxpayer provides information such as details of their income, the different exemptions that are applicable to them, any deductions that they are availing and the total taxes that they pay to the government. 

If it so happens that you have paid additional taxes, your tax return is the first mandate towards receiving the taxes back. It also contains details about any advance taxes that you have paid during a fiscal year. Till the AY 2018-19, though it was mandatory to file your tax returns there weren’t any serious consequences of missing the deadline to file your returns.

As per section 234F of the Income-tax Act, taxpayers must pay a penalty for delay in filing ITR. In simple words, if you fail to file your tax returns within the deadline for the current year i.e., 31st of July, you might end up paying up to INR 5,000 as penalties.

Why should you file your returns?

Apart from obviously not paying the hefty fines, there are quite a few additional benefits of filing your tax returns on time. If you are either planning to travel abroad or travel frequently, filing your returns regularly will aid in your visa processing. Most embassies look into the ITR filings of an individual.

Similarly, banks and financial institutions also look into the ITR. This allows for easier loan processing. As already mentioned, if a taxpayer has paid additional taxes more than their tax liability, filing their returns enables them to ask for a refund. And if you have incurred losses in the past, you can carry forward them only if you file your returns on a regular basis.

You will end up paying a penalty for delayed filing of income tax returns, should you miss the deadline. As per section 234F of the Income-tax Act any taxpayer who does not file their tax returns by the 31st of December   (for the current year) but does so before the 31st of December, he/she would end up paying as much as INR 5,000 as fines.

As per section 234F penalty after 31^st July stands at INR 5,000. This ruling has come into effect from the 1st of April 2017. There is a small caveat under section 234F applicability. Taxpayers whose annual income doesn’t exceed INR 5,00,000 will have to pay a maximum of INR 1,000 as a penalty for missing both deadlines. Below is the detailed 234F calculation for paying penalties.

Section 234F has been inserted in the Income-tax Act, 1961 for the levy of compulsory fee/penalties on the filing of returns after the due date.

Under this section, the fee (penalty) is levied if the Income-tax return is not filed within the due date. Earlier penalty for delay in filing of return was levied at the discretion of the Assessing Officer. But now, the same is payable before the filing of Income-tax returns.

The fee (penalty) will be as follows:

Click here to read an update from the Income-tax Department

Examples:

Situation 1

Mr A has a total income of Rs.6 lakh if he files his Income-tax return for Assessment Year 2024-25 (Financial Year 2023-24) on 25/07/2024. What will be the fee (penalty) under section 234F?

Since the Income-tax return is filed within the due date, no fee (penalty) will be levied.

Situation 2

Mr B has a total income of Rs.7 lakh if he files his Income-tax return for Assessment Year 2024-25 (Financial Year 2023-24) on 10/08/2024. What will be the fee (penalty) under section 234F?

Since the Income-tax return is filed after the due date, but on or before 31/12/2024, the fee (penalty) will be Rs.5,000/-

In the above situation, if the total income of the Assessed does not exceed Rs.5 Lakh, the fee (penalty) will be Rs.1,000/-.

Situation 3

Mr C has a total income of Rs.2.4 lakh if he files his Income-tax return for Assessment Year 2024-25 (Financial Year 2023-24) on 07/02/2022. What will be the fee (penalty) under section 234F?

Since the total income of the assessed is less than 2.5 lakh, no penalty will be levied u/s 234F till the last date of filing which is up to 31/12/2024.

Paying your taxes is important but filing your tax returns is even more. While there are considerable benefits to doing it well within the allowed time frame, the consequences of not doing it are going to be harsh.

Thus, it is recommended to complete your tax return filing as soon as you receive Form 16 as a salaried individual. A bit of negligence can turn out to be quite expensive. 

To pay a penalty under 234F challan code ITNS 280 is applicable. You can visit the NSDL website and select challan ITNS 280. Remember there are two ways to pay the penalty.

• You can either include it as your total income tax due or 
• Mention the amount under the Other head.

Once the form is complete, you can proceed with filing your tax returns. The respective bank will provide you with a receipt or challan for the transaction. Section 234F in case of revised return does not kick in, as long as you have filed your first return within the 30^th September deadline. 

FAQ

1. Is Section 234F applicable to my tax returns?
   The section would be applicable from the assessment year 2018-2019 if you fail to file your returns by the due date. For taxpayers who adhere to the deadline, there is no need to worry about the penalties. 
   
   
2. Are there any other fees or fines apart from Section 234F?
   Failing to file your returns on or before the deadline would attract an additional interest of 1% per month or till the amount is cleared for the unpaid taxes. This interest is applicable under Section 234A. This makes it even more crucial not to forget to file your returns within the mentioned deadline.
   
   
3. Can I carry forward my losses?
   You can carry forward any financial loss of previous years, as long as you have been filing your returns on or before the due date.