Missing the (ITR) deadline or failing to comply with other provisions of the Income Tax Act can prove expensive. Depending on the nature of the default, taxpayers may have to pay late filing fees, interest or penalties. In some cases, the penalty can be be as high as 200% of the tax payable on the income that was incorrectly reported, according to the Income Tax Department.
Besides filing the ITR on time, taxpayers are also required to accurately report all sources of income, pay taxes within the prescribed timelines and maintain books or records wherever applicable. Different types of non-compliance attract different consequences under the Income Tax Act.
Penalty for late ITR filing and under-reporting of income
One of the most common defaults is filing the ITR after the due date. Under Section 234F of the Income Tax Act, a filing the return after the prescribed deadline may have to pay a late filing fee of up to ₹5,000. However, where the total income does not exceed ₹5 lakh, the fee is restricted to ₹1,000, according to the Income Tax Department.
Another important provision is Section 270A, which deals with under-reporting and misreporting of income. If a taxpayer under-reports income, the penalty is equal to 50% of the tax payable on the under-reported income. However, where the under-reporting amounts to misreporting, such as suppression of facts, recording false entries or making incorrect claims, the penalty increases to 200% of the tax payable on that income.
Other income tax defaults that attract fees and penalties
Apart from late filing and under-reporting of income, the Income Tax Act prescribes penalties and fees for several other defaults.
|
Default |
Relevant section |
Consequence |
| Late filing of ITR | Section 234F | Late filing fee of up to ₹5,000. Restricted to ₹1,000 where total income does not exceed ₹5 lakh |
| Default in payment of tax | Section 221(1) | Penalty as determined by the Assessing Officer, not exceeding the amount of tax in arrears |
| Under-reporting of income | Section 270A | Penalty of 50% of the tax payable on the under-reported income |
| Misreporting of income | Section 270A | Penalty of 200% of the tax payable on the misreported income |
| Delay in filing TDS or TCS statements | Section 234E | Fee of ₹200 per day of delay, subject to the amount of TDS or TCS |
| Failure to maintain books of account | Section 271A | Penalty of ₹25,000 |
| Failure to get accounts audited where required | Section 271B | Penalty of 0.5% of turnover or gross receipts, subject to a maximum of ₹1.5 lakh |
| Source: Income Tax Department | ||
According to the Income Tax Department, these fees and penalties are prescribed under different provisions of the Income Tax Act and are levied depending on the nature of the default. In addition to these amounts, taxpayers may also be liable to pay the applicable tax and , wherever relevant.
Filing the ITR within the due date, reporting all sources of income accurately, paying taxes on time and complying with record-keeping or audit requirements can help avoid unnecessary notices, additional costs and prolonged disputes with the tax department.