Individual taxpayers must file their Income Tax Returns (ITR) for the Assessment Year 2024-25 (Financial Year 2023-24) by July 31, 2024, unless the department extends the deadline. Failure to comply with these rules incurs penalties outlined in Section 234F for filing your ITR after the deadline. 

 

The amount of the penalty depends on the date of filing your income tax return and your gross annual income.

When is it Mandatory to File Income Tax Returns

Every earning resident person of India needs to pay direct taxes if their annual income exceeds the tax-exempt limit. Hence, it is also crucial to know who is required to file these tax returns and when one needs to file an ITR. 

1. Total Annual Income Limit

If you have opted for the old tax regime and your income exceeds ₹2.5 Lakhs, you will have to pay taxes as per the applicable tax slabs. However, the tax-exempt limit under the new scheme is ₹3 Lakhs. 

2. Assets Abroad

In Schedule FA of your ITR form, you will have to disclose the income generated outside the political boundaries of India. Hence, you will be liable to pay taxes on financial interests in companies abroad, the authority held by the individual in an account, etc. 

3. Bank Current Account Deposits

While there are no tax regulations for current account deposits, Section 194N mandates banks to deduct TDS on the aggregate sum of cash withdrawals. 

4. International Travel Expenditure

As per October 2023 regulations, a TCS at the rate of 5% will apply if the foreign travel expenses per person are up to ₹7 Lakhs. An expenditure beyond this limit will attract TCS at the rate of 20%.

5. Annual Electricity Bill Limit

In case you are paying over ₹1 Lakh as a single aggregate electricity bill in a financial year, you will have to file an ITR.

6. Total Gross Professional Receipts

As a tax-paying individual, according to Section 44AA, Section 44AB, and Section 44ADA, you are required to file income tax returns. Under Section 44AB, this condition applies if the gross total of your professional receipts exceeds ₹50 Lakhs. 

7. TDS and TCS Limit

If your TDS and TCS deductions and collections have exceeded ₹25,000 during the previous financial year, you are liable to file income tax returns. 

8. Business Turnover

If you are a business owner and the yearly turnover of your business exceeds ₹60 Lakhs, an income tax return filing is a must for you. 

9. Bank Savings Deposits

With a similar context as the bank deposit limit, a maximum capping is applied to deposits made to savings accounts as well. If your deposits in one or more savings accounts exceed the limit of ₹50 Lakhs, an ITR filing is a prerequisite.

Who Needs to Pay Penalties under Section 234F

The following tax-paying entities need to pay penalties under Section 234F of the Income Tax Act in case of delay in ITR filing:

  • Individuals

  • Hindu Undivided Families

  • Companies

  • Firms

  • Trusts

  • Association of Persons (AOP)

  • Body of Individuals (BOI)

  • Other tax-paying entities/people

Penalty under Section 234F

Section 234F mandates levying a penalty as a late fee for missing the deadlines. You can find this schedule on the new Income Tax Returns portal to plan for due payments.

 

The late fee is calculated based on an individual’s/tax-paying entity’s overall annual income, keeping in mind the category they are included in as taxpayers. A breakdown of this is as follows. 

  • If your yearly income exceeds ₹5 Lakhs, the late fee would be ₹5,000

  • If your annual income is less than (or equal to) ₹5 Lakhs, your late fee will be up to ₹1,000

How to Pay Late Fee as per Section 234F

Before you file a belated return, you need to pay the Section 234F penalty by following these simple steps:

  1. Visit the e-filing portal and log in by entering PAN details, mobile number, and an OTP

  2. Select the relevant assessment year and choose ‘Self-Assessment Tax (300)’ as the type of payment

  3. Click on the continue button to enter the penalty amount

  4. After you continue to the next page, you can make the payment for a late fee under Section 234F 

Exceptions under Section 234F

Certain individuals are exempt from paying penalties under Section 234F of the Income Tax Act of 1961. Their criteria are stated as follows.

  • Individuals who don’t identify as senior citizens, i.e., those who are under the age of 60 years and have a yearly income of less than ₹2.5 Lakhs

  • Senior citizens (those above the age of 80 years) who have an annual income of ₹3 Lakhs or less

  • Those above 80 years of age (super senior citizens) who earn an annual income of less than ₹5 Lakhs

Other Repercussions for Late ITR Filing

Depending on your case, a late fee is not the only consequence you are entitled to. Other consequences can also follow, and you can find an explanation of a few below. 

  • Adjustments for Previous Losses

Delayed filing of your income tax returns imposes a heavy burden on your ability to claim exemption for previous long-term and short-term capital losses. This applies regardless of whether these losses are non-speculative or speculative.

  • Refund Delays

Should you accidentally make a calculation error that leads to excess tax payment or inadequate tax exemption due to various reasons, you are entitled to a tax refund. However, a delay in filing your ITR may limit your chance of receiving a full refund or any refund at all. 

  • Loan and Card Acquisition

Your loan or credit card eligibility relies heavily on your financial history, which includes your tax record. Hence, a financial record soiled by undisciplined income tax return filing can heavily impact your chance of getting a loan, credit card, or any such financial assistance. 

FAQs on Section 234F of the Income Tax Act, 1961

How much is the late fee under Section 234F of the Income Tax Act?

Depending on the category of taxpayer, you can be levied with a late fee ranging from ₹1,000 to ₹5,000.

Will I have financial trouble if I do not file my ITR?

In terms of consequences, late fees are among the penalties you may face. However, you may also experience delays in receiving refunds, dismissal of loss adjustments, and challenges in qualifying for loans.

As per Section 234F of the Income Tax Act, am I required to pay a penalty for late filing if I have an income of ₹2.5 Lakhs?

If your annual income is under ₹2.5 Lakhs, you are not required to pay income tax or any subsequent penalties or fees.

Do trusts qualify for the provisions as stated under Section 234F of the Income Tax Act?

Yes, trusts are included under the tax-paying entities eligible for Section 234F.

Does HUF get any exemptions on tax penalties?

Penalties and late fees are applicable to all backgrounds and categories listed under the sections of the Income Tax Act. Hence, individuals, trusts, corporations, Hindu Undivided Families, etc., are levied with late fees according to their annual gross income.

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