Income tax department admits error in charging late ITR filing fee

The income tax department has admitted that there has been an inadvertent error while processing income tax returns (ITR) of partners of firms whose accounts are liable to be audited. The taxman has assured that it will rectify the error on its own and remove the late fee charge.

© (AP Photo/Channi Anand, File

“In a few cases, fee under section 234F has been charged inadvertently in ITRs of Partners due to linkage of filing of Partner’s ITR with the filing of ITR of Firm. The same is being rectified suo moto to remove the late fee charged u/s 234F. The inconvenience caused is regretted!” the income tax department said in a tweet.

The clarification came in after several chartered accountants flagged the issue on social media.

Kuldip Kumar, Partner & Leader, Personal Tax at PwC India, said the error appears to be a technical problem.

Tax expert Neha Malhotra, director of Nangia Andersen Consulting Pvt Ltd, said this suo-moto rectification, a first-of-its-kind, while processing of the ITRs shall enhance the refund due to the partners of a partnership firm.

“Section 234F was introduced to ensure timely filing of returns of income. However, inadvertently, the ITR utility also levied the fees on the partners of the partnership firms, whose due date for ITR filing are linked with that of the partnership firm. Now rectifying the inadvertent error, the Income-tax authorities have decided to remove the penalty charged u/s 234F,” Malhotra told Livemint.

Reversal of the late fee charged under section 234F shall be considered in the computation of amount payable or refund due, as the case may be, on account of processing of the return.

For the financial year 2018-19 (assessment year 2019-20), all working partner of a firm whose accounts are required to be audited were supposed to file their ITR by September 30, 2019 which was later extended to October 31. For those living in Jammu & Kashmir and Ladakh, the last date has been further extended to November 30.

For other individual ITR filers, the last date was July 31 but was extended to August 31.

All persons including Individual, HUF, company, partnership firms, etc are liable to pay late filing fees under Section 234F, if the ITR is filed after their respective due dates. For those filing ITR after the due date but within 31 December are charged ₹5,000 and the penalty increases to ₹10,000 January onwards.

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