If a tax payer is charged with a penalty according to the provisions of section 234E of the Income Tax Act, the same has to be paid to the Income Tax Department and it cannot be waived under any circumstances.
When Section 234E applies:
Section 234E of the Income Tax Act, 1961 has been introduced by the Finance Act, 2012. It is applicable in the following cases:
1. Fees for late filing of TDS Statement – Failure on the part of a tax payer to furnish TDS statement on time will invite payment of fees by the deductor as per section 234E of the Income Tax Act.
If a deductor fails or neglects to furnish his TDS statement, a penalty of Rs. 200 per day will be charged on him, till the TDS statement is filed. The levied amount of penalty under normal circumstances is not more than the TDS deductibles.
Such fee is payable before filing of TDS Statement and the same should be evident in the TDS statement.
2. Fees for defaults in furnishing quarterly returns – Section 234E is also applicable in cases where a tax payer makes default in furnishing quarterly TDS or TCS return which should be submitted on or after 1st July, 2012.
If a tax payer fails to file his TDS or TCS return within due time as per section 200(3) or section 206(3) of the Income Tax Act, he shall be liable to pay a fee amounting to Rs. 200/- per day till he files the return. But the fee amount should not be more than the amount of tax deductible.
Since 1st July, 2012 it is not allowed to file a belated quarterly TDS or TCS return without payment of fee as per 234E.
As per the implications of The Finance Act, Section234E is applicable from 1st July, 2012. One can use challan to pay the fee with his Banker or use any other challan which has sufficient balance to pay the amount.
The penalty under this section cannot be waived:
The penalty under section 234E of the Income Tax Act is mandatory and it cannot be waived under any circumstances.
The Government has used the term “Fee” in 234E. It is a statutory levy. It is not a penalty but a late fee. As such waiver is not possible since it is levied in the form of fee and not in the form of penalty.
However the validity of section 234 E of the Income Tax Act, 1961 has been challenged in the High Court of Kerala. The levy of penalty in the form of ‘fee’ has been opposed stating the same as illegal and unreasonable in a writ petition filed before the Honorable High Court. The writ petition has been admitted and all the proceedings initiated against the petitioner as per section 234E of the Income Tax Act have been stayed or two months.