With the arrival of the due date for filing income tax return for Financial Year 2016-17, taxpayers are in a hurry to file their tax return. More because most of them are worried that they will be fined by the Income Tax Department if they fail to file their ITR on time. It may be recalled that Finance Minister Arun Jaitley had in his Budget announcement in February this year proposed that a maximum fee amount of Rs 10,000 will be levied for delay in filing of return.
However, while filing of return on time is highly recommended, you need not worry for late filing now as this fee is not applicable for returns filed for FY2016-17 or AY2017-18. This enhanced fee will be applicable from 1st April, 2018 and, accordingly, apply in relation to Assessment Year 2018-19 and onwards.
It may be noted that in the Budget 2016-17, Finance Minister Arun Jaitley had proposed reduction in the rate of taxation for individual assesses between income of Rs 2.5 lakh and Rs 5 lakh to 5% from the earlier rate of 10%. He had also proposed to levy a surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between Rs 50 lakh and Rs 1 crore.
Besides, in order to ensure that income tax return is filed within the due date, the Budget had proposed to insert a new section 234F in the Income Tax Act to provide that a fee for delay in furnishing of return shall be levied for assessment year 2018-19 and onwards in a case where the return is not filed within the due dates specified for filing of return under sub-section (1) of section 139.
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The proposed fee structure was as follows:
(i) a fee of Rs 5,000 shall be payable, if the return is furnished after the due date but on or before the 31st day of December of the assessment year;
(ii) a fee of Rs 10,000 shall be payable in any other case. However, in a case where the total income does not exceed Rs 5 lakh, the fee amount shall not exceed Rs 1,000.
In view of the above, consequential amendment in section 140A was made to include that in case of delay in furnishing of return of income, along with the tax and interest payable, fee for delay in furnishing of return of income shall also be payable.
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In the Budget, it was also proposed to make consequential amendment in sub-section (1) of section 143 to provide that in computation of amount payable or refund due, as the case may be, on account of processing of return under the said sub-section, the fee payable under section 234F shall also be taken into account. Consequentially, these amendments will take effect from lst April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent years.