- Penalty for Under-reporting or Misreporting of Income u/s 270A
- Penalty for Late Filing of Income Tax Return - Section 234F
- What will happen if I do not file my Income Tax Return (ITR) ?
- Interest Penalty Imposed Under Section 234C of Income Tax Act
- Penalty for Late Filing of Income Tax Return - List of Tax Penality
- Section 234A of Income Tax Act - Interest for Late Filing of ITR
- Section 234B Of Income Tax Act: Interest on Delayed Payment of Advance Tax
- What will happen if I do not file my Income Tax Return (ITR) ?
- Fees for Delay in Filing Income Tax Return u/s 234F
- Penalty for Late Filing of Income Tax Return
- Penalty for Under-reporting or Misreporting of Income u/s 270A
Section 234A: Interest Penalty on Delayed ITR Filing
Every Indian citizen is responsible for paying income tax and filing income tax returns. The government uses your taxes as a major source of revenue for important public programs and services.
The due date to file ITR is generally 31st July of every assessment year. In case if you miss this deadline, ITD gives you the option to file late return and claim your tax refund i.e. 31st December.
If you delay or miss the filing, you have to face some strict consequences like having to pay interest based on Section 234A of the Income Tax Act In this article, we will discuss section 234A of the Income Tax Act and the penalties leviable under this section.
Types of Interest Under Section 234
There are 3 different types of interest under section 234 -
- Section 234A - Delay in Filing of ITR
- Section 234B - Delay in payment of advance tax
- Section 234C - Deferred payment of advance tax
Section 234A of Income Tax Act-– Interest for Default in Filing Tax Return
Section 234A of the Income Tax Act in India deals with the interest payable by taxpayers for the delay in filing income tax returns. This section primarily pertains to the payment of interest on the amount of tax that remains unpaid or is not paid within the specified due date for filing income tax returns.
Here are the key points regarding Section 234A:
- Delayed Filing: If an individual or entity fails to file their income tax return by the due date, i.e., 31st July or as specified by the Income Tax Act, they might be liable to pay interest under Section 234A.
- Interest Calculation: The interest is calculated at a simple interest rate of 1% per month or part of a month for the period of delay. The interest is calculated on the amount of tax that remains unpaid.
- Applicability: Section 234A of the Income Tax Act is applicable to cases where there's a delay in filing income tax returns, and there's a tax payable by the taxpayer.
- Exceptions: If there's no tax liability or if the taxpayer has paid all the taxes before the due date, Section 234A might not be applicable. However, it's crucial to file the returns on time, even if there's no tax liability, to avoid potential penalties and complications.
- Penalties: Apart from interest under Section 234A of the Income Tax Act, there could also be penalties for delayed filing or non-filing of income tax returns. These penalties could vary based on the specific circumstances.
Interest Payable in Section 234A
In the case of delay in filing an Income tax return (ITR), the taxpayer has to pay interest @ 1% per month. This amount is calculated on the tax sum that is outstanding. The individual has to pay interest from the first date (after the due date) till the date on which the income tax return is filed. For this also, there are two cases:
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a. If the taxpayer has not claimed his or her tax refund.
In this case, the taxpayer has to pay the interest on the total outstanding tax amount.For Example:Mr. Viraj had to file his income tax return by 31st July 2018 but delayed and filed his ITR in February 2019 for the financial year 2017-18. His outstanding tax amount is Rs. 2.5 lakh. Mr Viraj delayed his ITR for 7 months( August, September, October, November, December, January, February) ( part of a month is rounded off), and if assumed he had not claimed his tax refund, he will be liable to pay interest as a penalty.
Interest to be paid will be = 250000*1%*7 =17500Under section 234A of the Income Tax Act, Mr. Viraj is liable to pay Rs 17500 as a penalty in the form of interest levied @1% for the months delayed.
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b. If the taxpayer has claimed his or her tax refund.
In case the taxpayer claims a tax refund even if he or she has failed to file his income tax return on time, the interest will be charged on the net amount outstanding for him or her. This will be calculated as the total outstanding tax amount minus the tax refund.
For example: Mr. Tarun is eligible and claims a tax refund of Rs. 40000 while filing his ITR in February 2019. The outstanding amount of tax to be paid is Rs. 150000. The penal interest will be charged on the net value obtained after adjusting the tax refund from the outstanding amount. The net outstanding tax amount = 150000-40000= 110000. Hence, the interest to be paid by him will be = 110000*1%*7= 7700
Avoid paying high interest as a penalty. File your income tax return timely.
Frequently Asked Questions
Q- Is Delay in filing ITR charged?
Yes, if you delay in filing ITR from the due date that is fixed by the Income Tax Act, you will be charged a penalty in the form of interest to be paid on the outstanding taxable amount.
Q- Does section 234A apply in case of refund?
Yes, an interest of 1% per month is to be paid by the defaulter when filing a return of income tax on time.
Q- How is the penal interest calculated on the taxable amount?
The interest that is to be charged will be computed from the due date for the filing of an income tax return in the financial year till the date you actually filed your income tax return. The interest that is charged to you will be 1% per month for the months you have delayed your filing.
Q- I am 4 months and 10 days late in filing my ITR. How do I calculate interest penalty under Section 234A?
If the taxpayer missed the last date for filing ITR, then Interest shall be payable @ 1% per month or part of the month.
Q- How is 234C interest calculated?
Advance tax is paid on the following dates of a financial year:
Q- What happens in case of a claim of a tax refund?
The taxpayer needs to file an Income Tax Return and claim an Income tax Refund.