Section 140A of the Income Tax Act covers the provisions relating to the payment of self-assessment tax. Whereas, section 140A (3) of the Income Tax Act deals with the penalty for non-payment of self-assessment tax.
As per section 140A (3), if the taxpayer fails to pay the self-assessment tax (either wholly or partly) or interest or fee, then, such taxpayer shall be treated as an assessee in default. In such a case, the penalty would be imposed by the assessing officer as per his discretion.
The current article elucidates applicability of penalty for non-payment of self-assessment tax along with the amount of penalty payable thereon.
Understanding how and when the penalty under section 140A (3) of the Income Tax Act is leviable –
It goes without saying that the taxpayer, earning above the exemption limit, is required to duly discharge its income tax liability. Further, it is also important to note here that, the taxpayer can file the income tax return only after discharging its entire income tax liability.
| If Assessee paid tax u/s. 140A, interest u/s. 234A to be demanded only on short tax payment |
| Levy of Penalty u/s 221 by A.O. is discretionary and can be waived off if Good and sufficient reasons exists |
Such income tax liability is discharged by the taxpayer in various forms like advance tax or tax deduction at source (TDS) or self-assessment tax. Section 140A (1) deals with the self-assessment tax. In simple terms, self-assessment tax refers to the balance tax payable by the taxpayer after taking into account advance tax and TDS.
In case the taxpayer fails in making payment of such self-assessment tax (along with interest and fee), then, such taxpayer would be liable to pay the penalty under section 140A (3) of the Income Tax Act.
Following two section needs to be referred simultaneously, in order to understand the penalty amount in case of non-payment of whole or part of self-assessment tax or interest or fees –
1. Section 140A (3) of the Income Tax Act; and
2. Section 221 (1) of the Income Tax Act
As per section 140A (3), in case the taxpayer defaults in making payment of the whole or part of self-assessment tax or interest or fees, then, such taxpayer shall be ‘deemed to be an assessee in default’ to the extent of the unpaid tax or interest or fee.
Section 221 (1) levies penalty under the case when the taxpayer is ‘deemed to be an assessee in default’. As per said section, the penalty in such case would be an amount as directed by the Assessing Officer (AO). However, the maximum amount of penalty cannot exceed the amount of tax in arrears.
Synopsis –
In case the tax is payable at the time of filing of the income tax return, the taxpayer is required to pay self-assessment tax first, and the income tax return can be filed only and only after payment of such self-assessment tax.
In case the taxpayer defaults in payment of self-assessment tax, he would be liable to pay penalty of an amount as directed by the AO, however, such penalty amount cannot exceed the arrear tax amount.
Read Also:-
| S. No. | Title |
| 1 | Section 272BB Penalty for failure to comply section 203A provisions |
| 2 | Section 272B Penalty for failure to comply with provisions of PAN |
| 3 | Section 272AA Penalty for failure in complying with provisions of section 133B |
| 4 | Section 272A Penalty for failure to answer questions or furnish information / returns/ statements or allow inspections etc |
| 5 | Section 271J Penalty on professionals for furnishing incorrect information in reports / certificates |
| 6 | Section 271I Penalty for failure in furnishing Form 15CA & Form 15CB |
| 7 | Section 271H Penalty for late filing/non-filing of TDS or TCS return |
| 8 | Penalty for failure in furnishing report or furnishing inaccurate report under section 286 – Section 271GB |
| 9 | Section 271GA Penalty for failure in furnishing the information / document in Form 49D as required under section 285A |
| 10 | Section 271G Penalty for failure to furnish information / document as per provisions of section 92D |
| 11 | Section 271FB Penalty for default in furnishing return of fringe benefits |
| 12 | Section 271FAB Penalty for failure to furnish statement / information / document by an eligible investment fund |
| 13 | Penalty for providing inaccurate statement of financial transaction or reportable account- Section 271FAA |
| 14 | Section 271FA Penalty for failure in furnishing statement of financial transactions or reportable account |
| 15 | Section 271E Penalty for contravening provisions of section 269T |
| 16 | Section 271DB | Penalty for contravening provisions of section 269SU |
| 17 | Section 271DA Penalty for contravening provisions of section 269ST |
| 18 | Section 271CA Penalty for failure to collect tax at source (TCS) |
| 19 | Section 271D Penalty for contravening provisions of section 269SS |
| 20 | Section 271C Penalty for failure / non-deduction / non-payment of TDS |
| 21 | TDS Rate Chart for AY 2020-21 and AY 2021-22 |
| 22 | Section 271BA Penalty for failure to furnish section 92E report |
| 23 | Section 271B Penalty for failure to get accounts audited |
| 24 | Section 271AAC Penalty in respect of certain specified income |
| 25 | Section 271AA Penalty for failure to maintain Transfer Pricing documents |
| 26 | Section 271A Penalty for failure to keep / maintain or retain books of accounts, documents |
| 27 | Section 270A(1) Penalty for under-reporting & misreporting of income |
| 28 | Section 269SU Acceptance of payment through electronic modes |
| 29 | Section 234F Late fees for default in filing of income tax return |
| 30 | Section 234E Late Fee for default in filing of TDS / TCS returns |
| 31 | Section 158BFA(2) – Penalty on undisclosed income for block period |
| 32 | Section 140A(3) Penalty for non-payment of self-assessment tax |
