(Last Updated On: March 3, 2017)

Section 234F -Fee for delayed filing of Income tax return

Summary : As per Finance Bill 2017 w.e.f FY 2017-18 (AY 2018-19) new section 234F is proposed to be inserted to provide for levy of fees for late filing of return after the due date. Rs. 5,000 would be levied for return filed after the due date but on or before the 31st day of December of the assessment year and Rs 10,000, in any other case. However, where the total income does not exceed Rs. 5 lakh, the fee amount shall not exceed Rs. 1,000.

Budget 2017-18 – Memorandum Explaining the Provisions of section 234F – Income Tax

In view of the non-intrusive information-driven approach for improving tax compliance and effective utilization of information in tax administration, it is important that the returns are filed within the due dates specified in section 139(1). Further, the reduced time limits proposed for making of assessment are also based on pre-requisite that returns are filed on time.

In order to ensure that return is filed within due date, Finance Bill 2017 proposed to insert a new section 234F in the Act to provide that a fee for delay in furnishing of return shall be levied for assessment year 2018-19 and onwards in a case where the return is not filed within the due dates specified for filing of return under sub-section (1) of section 139. The proposed fee structure is as follows:—

(i) a fee of five thousand rupees shall be payable, if the return is furnished after the due date but on or before the 31st day of December of the assessment year;

(ii) a fee of ten thousand rupees shall be payable in any other case.

However, in a case where the total income does not exceed five lakh rupees, it is proposed that the fee amount shall not exceed one thousand rupees.

In view of above, Finance Bill 2017 proposed to make consequential amendment in section 140A to include that in case of delay in furnishing of return of income, alongwith the tax and interest payable, fee for delay in furnishing of return of income shall also be payable.

It is also proposed to make consequential amendment in sub-section (1) of section 143, to provide that in computation of amount payable or refund due, as the case may be, on account of processing of return under the said sub-section, the fee payable under section 234F shall also be taken into account.

Consequentially, it is also proposed that the provisions of section 271F in respect of penalty for failure to furnish return of income shall not apply in respect of assessment year 2018-19 and onwards.

These amendments will take effect from lst April, 2018 and will, accordingly apply in relation to assessment year 2018-19 and subsequent years.

[Clauses 56, 57, 75 & 85]

Relevant Clause 56 of Finance Bill 2017

Amendment of section 140A.

56. In section 140A of the Income-tax Act, with effect from the 1st day of April, 2018,—

(i) in sub-section (1),—

(a) in the long line,—

(A) after the words “together with interest”, the words “and fee” shall be inserted;

(B) for the words “and interest”, the words, “, interest and fee” shall be substituted;

(b) in the Explanation, for the words “and interest as aforesaid, the amount so paid shall first be adjusted towards”, the words “, interest and fee as aforesaid, the amount so paid shall first be adjusted towards the fee payable and thereafter towards” shall be substituted;

(ii) in sub-section (3), for the words “or interest or both” at both the places where they occur , the words “,interest or fee” shall be substituted.

Relevant Clause 57 of Finance Bill 2017

Amendment of section 143.

57. In section 143 of the Income-tax Act,—

(a) in sub-section (1), with effect from the 1st day of April, 2018,—

(i) in clause (b), for the words “and interest”, the words “, interest and fee” shall be substituted;

(ii) in clause (c),—

(A) for the words “and interest”, the words “, interest and fee” shall be substituted;

(B) for the words “or interest”, the words “, interest or fee” shall be substituted;

(iii) in the first proviso, for the words “or interest”, the words “, interest or fee” shall be substituted;

(b) for sub-section (1D) [as substituted by section 68 of the Finance Act, 2016], the following shall be substituted, namely:—

“(1D) Notwithstanding anything contained in sub-section (1), the processing of a return shall not be necessary, where a notice has been issued to the assessee under sub-section (2):

Provided that the provisions of this sub-section shall not apply to any return furnished for the assessment year commencing on or after the 1st day of April, 2017.”.

Relevant Clause 75 of Finance Bill 2017 –section 234F.

Insertion of new section 234F.

Fee for default in furnishing return of income.

75. After section 234E of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2018, namely:—

“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 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.”.

Relevant Clause 85 of Finance Bill 2017 –section 234F.

Amendment of section 271F.

85. In section 271F of the Income-tax Act, the following proviso shall be inserted with effect from the 1st day of April, 2018, namely:—

“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.”.

234F- Fee for delayed filing of Income tax return w.e.f AY 2018-19