Section 234F of Income Tax Act

Ideally, taxpayers should ensure that they are filing their Income Tax Returns (ITR) on time. However, failing to do so can attract a penalty for late ITR filing. Section 234F of the Income Tax Act is all about the late fee or penalty incurred on the post-deadline filing of ITR in India. 

Section 234F of the Income Tax Act came into force on 1 April 2018 and pertains to penalties or late fees as per the scope of the act. 

Let us learn about Section 234F and its associated nitty gritty here. 

What is the 234F late fee or penalty scope?

As per Section 234F, if an individual has failed to file ITR by the deadline, they are liable to pay an interest rate of one per cent every month on the remaining unpaid tax amount.

Late filing penalty or fee u/s 234F can be a maximum of ₹5000, provided the individual furnishes returns by the 31 December deadline for the assessment year. Earlier, this penalty limit was ₹10,000 (before the Financial Year (FY 2021). However, suppose your total annual income does not exceed ₹5 lacs. In that case, the Income Tax Department (ITD) provides you with a relief on this penalty. Late fees u/s 234F for total annual income below ₹5 lacs is ₹1000. 

Let us understand the scope of Section 234F of the Income Tax Act. The taxpayers that fall under the purview of the 234F Income Tax Act are as follows: 

• Individuals who are Indian Citizens 
• Company and firms 
• Association of Persons (AoPs) 

These assessees are liable to pay late fees or penalties if the ITR is not filed within the stipulated deadline. 

Who is required to file ITR?

Any person who has had an income and paid tax for the same during a financial year is required to file an ITR in the AY preceding the financial year. No ITR is applicable for those who have not paid any tax during the financial year. 

The following individuals mandatorily need to file Income Tax Returns:

• Tax slabs, deductions and exemption limits are stated for every Budget for a financial year. If an individual’s income falls above the basic exemption limit, then they will have to file an ITR. This also depends on their age (senior citizens and normal assessees). 
• If the taxpayer has assets outside India or is the signing authority for any foreign account or beneficiary of any asset located outside India, they need to file an ITR. 
• If an individual has deposited an amount exceeding ₹1 crore in a bank account (in savings or current account) during a financial year, they need to file returns. This would also specifically apply if you have deposited more than ₹50 lacs in a savings bank account during the year. 
• If an individual spends ₹1 lac on an electricity bill or ₹2 lacs on International travel or if gross professional receipts exceed ₹10 lacs, they are obligated to file an ITR. 
• If the assessee’s total Tax Deduction at Source (TDS) or Tax Collection at Source (TCS) exceeds ₹25,000, they have to file returns. 
• If the annual business turnover exceeds ₹60 lacs, the person or entity must file tax returns. 

What is Challan 280?

To pay the Section 234F penalty, the assessee is required to fill out Challan 280. If the assessee’s income tax filing is delayed, they must fill this challan with the following details. 

• Enter details like assessment year and choose between the applicable tax type (like corporate tax and others). 
• Fill in details like Permanent Account Number (PAN) in the challan.
• Write personal identification details like your full name and residential address per your identification proof documents. 
• Enter your phone number. 
• Select from the type of taxes given in the challan like Surtax, advance tax, Self Assessment Tax (SAT), tax on regular assessment, tax on domestic enterprise’s disbursed profits and tax on distributed income of unit holders. 
• Enter payment details, name of bank, bank branch, and signature of the payee.
• Select the type of payment as self-assessment (300). 

Conclusion

For all individual assessments, the last date for ITR filing for Assessment Year (AY) 2024 is 31 July 2024. Individuals must ensure that they complete their ITR filing deadline to avoid attracting penalties or late fees under Section 234F.