ZenIT || Clarification on Interest under Section 234F

As per  Section 234F of the Income Tax Act, taxpayers must pay interest for delay in filing ITR. In simple words, if the user fails to file his tax returns within the standard deadline, the user might end up paying up to INR 10,000 as interest.

(1) Without prejudice to the provisions of the Income Tax  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 the said section,       the User 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 the return of income required to be furnished for the assessment 2018-2019 onward.

Every person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not or an artificial juridical person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year, without giving effect to the provisions of [clause (38) of section 10 or] section 10A or section 10B or section 10BA or Chapter VI-A exceeded the maximum amount which is not chargeable to income-tax,

No penalty shall be levied in case Gross Total Income i.e. Income before deductions does not exceed maximum income not chargeable to tax i.e:

Rs. 2,50,000 for normal citizen (age < 60),
Rs. 3,00,000/- for senior citizens (age 60 or above) and
Rs. 5,00,000/- for super senior citizens ( age 80 or above).

Below are a few examples to understand the concept for various cases:

Case 1:

In the case of an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, where the Gross total income is above 2 lacs 50 thousand but below 5 lacs,  then the person is required to furnish a return of income under section 139 and if the return is filed after the due date, then under such a case, 234 f Penalty of Rs. 1000 would be applicable. In this case, 234 f would not be more than Rs 1000:

Case 2:

Where Total income is  (Net taxable income) above 5 lacs and the return is filed after the due date, then under such a case, 234 f penalty of Rs 5000 would be applicable till 31st December: 

 

“In the same case, if the return is filed after 31 December 2023 (A/y 2023-24), then 234 f penalty of Rs 10,000 would be applicable”

Note – The above condition is applicable for all cases (status)

Case 3:

In the case of Company, Partnership and LLP, if the total income does not exceed five lakh rupees, the fee payable under this section will be Rs 1000. Hence it can be said that in the case of Company, Partnership and LLP, if the income is nil or if there is a loss and the return is filed after the due date, then 234F liability will be attracted:

Case 4:

In the case of AOP (Association of Persons ), and AOP Trust, condition 1 is applicable for a 234F penalty, where Gross total income is above 2 lacs 50 thousand,  and the return is filed after the due date, then 234F Penalty of Rs 1000 would be applicable:

In the Software, we have an additional feature for entering Interest Manually. 

To Fill Manual interest, please follow the process below:

Step 1:

Open the Income Tax software - Go to Transactions → Manual Interest option given in the menu bar:

Step 2:

Here from the drop-down,  Select "Manual" to calculate the interest manually and then enter the amount.

Hope This Helps.

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