What Are the Penalties for Late Tax Filing in India?

Posted In | Finance | Accounting Software | India Accounting Tax

Tax filing is an essential part of financial planning and management for individuals and businesses in India. The government has set strict deadlines for filing Income Tax Returns (ITR) to ensure timely compliance with tax laws. However, sometimes taxpayers may miss the deadline due to various reasons, leading to late filing of their tax returns. In such cases, the taxpayers may face penalties and other consequences as per the provisions of the Income Tax Act, 1961. This article aims to provide an overview of the penalties for late tax filing in India.

 

Penalties for Late Tax Filing

The penalties for late tax filing in India can broadly be classified into two types: the late fee under Section 234F and the interest under Sections 234A, 234B, and 234C of the Income Tax Act, 1961.

 

1. Late Fee Under Section 234F

The Income Tax Act, 1961 introduced a late fee provision under Section 234F for the financial year 2017-18 onwards. As per this provision, taxpayers who file their ITR after the due date will be liable to pay a late fee. The amount of late fee depends on the date of filing and the total income of the taxpayer. The late fee structure is as follows:
 

• If the ITR is filed between the due date and December 31 of the assessment year, the late fee is ₹5,000.
   

• If the ITR is filed between January 1 and March 31 of the assessment year, the late fee is ₹10,000.
   

• However, if the total income of the taxpayer does not exceed ₹5,00,000, the late fee shall not be more than ₹1,000.
   

2. Interest Under Sections 234A, 234B, and 234C

Apart from the late fee, taxpayers may also be liable to pay interest on the unpaid tax amount due to late filing of their ITR. This interest is calculated under the following sections of the Income Tax Act, 1961:
 

1. Section 234A: If the taxpayer files the ITR after the due date, they will have to pay an interest of 1% per month on the unpaid tax amount, starting from the due date until the date of filing.
    

2. Section 234B: If the taxpayer has not paid at least 90% of the tax liability as Advance Tax by March 31 of the financial year, they will be liable to pay an interest of 1% per month on the unpaid tax amount, starting from April 1 until the date of filing the ITR.
    

3. Section 234C: If the taxpayer has not paid the required percentage of Advance Tax on the specified dates (i.e., June 15, September 15, and December 15), they will have to pay an interest of 1% per month on the unpaid tax amount for a period of three months.

 

Late tax filing can lead to hefty penalties and interest charges. Hence, it is crucial for taxpayers to be aware of the due dates for filing their ITR and ensure timely compliance with the tax laws. In case of any difficulty in filing the ITR, taxpayers should seek professional assistance to avoid penalties and other consequences.