Income Tax--Current Issues

Practice Update

V.K. Subramani

LEVY OF FEE UNDER THE INCOME TAX ACT

In the recent times, the provisions of Income-tax Act, 1961 uses the expression 'fee'. Given the tax administration litigated the claim of 'fee' as deductible expenditure by the assessees, it could be stated that it is debatable whether the term was used consciously or just to sound soft in spite of collecting some money to the exchequer for breach of timelines by them. However, courts have consistently upheld the claim of taxpayers by holding that it is a deductible expenditure. Obviously, it is deductible on actual payment basis since the term used is 'fee' and is covered by section 43B.

Chapter XVII-G has the title 'Levy of fee in certain cases'. Section 234E is meant to cover delay in furnishing TDS/TCS statements which are to be furnished (every quarter of the financial year) within the time prescribed under section 200(3)/206C(3) respectively. For every delay the deductor/collector have to pay fee @ Rs. 200 for every day during which the failure (delay) continues. The maximum amount of fee however shall not exceed the amount of TDS/TCS, as the case maybe.

Section 234F is meant for delayed filing of ITRs. Where the ITR is filed beyond the 'due date' specified in section 139(1), it is applicable. Where the total income of the assessee exceeds Rs. 5 lakhs, the amount of fee payable is Rs. 5,000. In other cases, it is Rs. 1,000. It would be interesting to note that the maximum time for filing the ITR even under section 139(4) i.e. belated return is 3 months before the end of the assessment year. Thus, the timelines seem to be rigid thereby seeking prompt compliance from the taxpayers.

Section 234G is meant for levy of fee for default in furnishing (i) statement or certificate in respect of scientific research expenditure incurred and issue of certificate to the donor for claiming deduction as enumerated in section 35(1A); and (ii) statement or certificate in respect of donations received during the year and issue of certificate to the donors to claim deduction which are enumerated in section 80G(5)(viii)/80G(5)(ix) respectively. This was inserted in the statute book by the Finance Act, 2020. The fee payable is Rs.200 per day during which the failure continues.

Section 234H was inserted by the Finance Act, 2021 w.e.f. 1st April, 2021. Where the assessee who is required to intimate Aadhaar number under section 139AA (2) does not do so, he is liable to pay 'fee' of Rs. 1,000 which is curiously payable only when he makes intimation of his Aadhaar number subsequently.