Income Tax Portal Levying Late Fee For ITR Filing: Is It Valid?

In a usual case for filing ITR for the previous financial year i.e. currently FY 2021, Assessment year (2021-2022), the income tax return has to be mandatorily filed by July 31 or the due date for most cases/individuals barring few is July 31. Nonetheless, the CBDT taking into account the disruption caused due to the coronavirus pandemic has allowed various relaxations and hence the ITR filing can also be made by an extended date of up to September 30, 2021.

Income Tax Portal Levying Late Fee For ITR Filing: Is It Valid?

Nonetheless, the income tax portal is charging late fee despite the relaxation in income tax filing due date.

Is the late fee being charged for filing ITR for FY21 is valid?

It is being observed that despite the relaxation in ITR filing due date and even when the taxpayers have filed their ITR for FY21 in the last few days, the tax portal is charging a late filing fee. Tax-filers are taking the issue on the social media and asking the department to remove the same from the portal.Why is this happening?

Why the income tax portal is charging late fee for ITR filing despite relaxation?

Experts see it to be a technical error whereby the department of income tax has not updated the extended deadline to file ITR for the FY21 in the tax filing system.

What should tax-filers do?

Tax experts suggest to wait and watch till the Central Board of Direct Taxes (CBDT) resolves the issue. This is because as the tax filing of a return is not possible without paying the penalty in lieu of late filing of tax return, which is though not the case here.

Late ITR filing penalty rules in a usual case

-Interest under Section 234A

In a case if you have not filed the ITR by the due date or missed the deadline and when you have to make some outstanding tax payment to the department, and on the unpaid taxes amount you will be charged an interest of 1% per month or part of the month. The interest shall be levied or applicable from the due date that applies in your case till the time you actually file the return.

Illustration Mr. Kumar is running a medical store. The due date for filing the return of income in his case is 31st July. He filed his return of income on 3rd December. Tax liability of Mr. Kumar for the year is Rs. 28,400 (which is paid on 3rd December). Advance tax paid by him is Rs. 15,000 and he has TDS credit of Rs. 5,000.
Will he be liable to pay interest under section 234A, if yes then how much? Mr. Kumar has filed his return of income after the due date i.e. after 31st July and hence, he will be liable to pay interest under section 234A. Interest will be levied at 1% per month or part of the month. The due date of filing the return of income is 31st July and the return of income is filed on 3rd December and hence, there is a delay of 4 months and 3 days. Part of the month i.e. 3 days will be considered as full month and hence, interest will be charged for a period of 5 months. Interest will be levied at 1% per month on Rs. 8,400 (*) for 5 months. Thus, interest under section 234A will come to Rs. 420.

(*) Advance tax of Rs. 15,000 and TDS of Rs. 5,000 are to be deducted from the tax liability of Rs. 28,400, hence, net liability after deducting advance tax and TDS will come to Rs. 8,400. Thus, interest will be levied on Rs. 8,400.

Note the illustration is taken from Income tax web site.

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