Section 234F Late fee  for filing ITR-When statistics overrules the mathematics

Section 234F Late fee  for filing ITR-When statistics overrules the mathematics. No surprise if some relaxation is given to the salaried class.

Hurrah ! Extension of ITR filing due date of 31st July 2018 to 31st August 2018 by CBDT. The applicability of late fee u/s 234F also gets extended automatically Click Here for more details >>

By now perhaps everybody knows that filing return of income (ITR) after the prescribed due date shall attract a late fee under newly inserted section 234F of the Income Tax Act, 1961.

The quantum of the late fee is Rs. 5000/- if the return is furnished on or before 31st December of the assessment year and Rs. 10000/- if return is filed after 31st December. However the late fee is restricted to Rs. 1000/- if the total income (taxable income) is not more than 5 lakhs.

The earliest prescribed due date is 31st July for all except for companies and cases covered under audit. Majority of the tax payers who are required to file their ITR on or before the dead line of 31st July, 2018 are salaried employees. Form 16 which is TDS certificate from employer, is a quintessence before a salaried employer can file his/her returns of income and 15th June is the prescribed date by when an employer is obliged to handover the said Form 16 to the employee.

So, going by the mathematics, an employee has 45 days window to file his/her ITR. Everything seems perfectly worked out by the Taxman. However, the problem here is that the statistics overrules the mathematics here.

The truth is that the said Form 16 reaches the hand of the employees much after the prescribed date of 15th June and most of the employee gets it in the first week of July only. The delay is even worse in the government departments.

Secondly, the real problem begins for an employee who discovers that the salary or the tax deducted has not been correctly reflected in his/her Form 16. The taxpayer find himself trapped in a double whammy, one the one end is the Taxman (the devil) with his fork asking to file return within due date or else pay late fee and on the other hand is the devil again requiring filing of return only after matching it with 26AS Statement, else face penalty for furnishing inaccurate particulars. This is in addition to any delay/errors in other TDS certificates (Form 16A) for Tax deducted on interest etc.

Thus the effective window available to salaried classes is much narrow than it appears to the Law makers. I said that here statistics overrules the mathematics because, this is a classic example when those entrusted with the responsibility of giving good governance never care to see the ground realities and set things right before burdening the taxpayers with unreasonable fines.

It is notable that the late fee under section 234F is mandatory and is not a penalty that would require a show cause notice, where assessee can show a reasonable cause for not filing the return within the prescribed due date. Neither the order of late fee would be appealable as held for similar section 234E regarding late fee for default in furnishing TDS return.

Perhaps, the due date of 31st July for the salaried employees needs to be revisited to explore the possibility of adding few more days to it. Since hundred per cent tax on salary is deducted at source, there would be no major loss to the Revenue either.

Extension or Deferment of Provisions of Section 234F

No one should be surprised if some relaxation is given in the late fee u/s 234F by extension of the applicability of the section or in some form for the deadline July 2018, After all, 2018 is expected to be an election year and no wise Government would want to take the wrath of salaried employees who forms a large part of middle class vote bank.

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