There is not any direct interest on Late filling of ITR. (this may Impose Penalties)

But, If you do not file income tax returns on or before the due date, you would be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid as per section 234A.

It’s important to note that one’s ITR cannot be filed if one hasn’t paid the taxes.

Penalties :

Late Filing Fees u/s 234F

Effective from the FY 2017-28, a late filing fee will be applicable for filing your returns after the due date under section 234F. For instance after due date for FY 2020-21  which is 31st Dec 2021.

The maximum penalty is Rs. 10,000. If you file your ITR after the due date (30th Sep) but before 31 December, a penalty of Rs 5000 will be levied.

For returns filed later than 31 December of the relevant assessment year, the penalty levied will be increased to Rs.10,000.

There is a relief given to small taxpayers – the IT department has stated that if the total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 1000.

Section 40b determines the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. The amount over the specified limit is not allowed as a deduction to a partnership firm.

Remuneration To Partners

Remuneration includes salary, bonus, commission .Remuneration in partnership firm is allowed as a deduction if following conditions are satisfied

1. Remuneration is allowed only to working partners.
2. Remuneration must be authorised by partnership deed and according to the terms of partnership deed. Also the amount of salary or manner of its computation is to be mentioned in the deed. If there is not any such provision in deed then no deduction is allowed. Normally people mentions in deed that salary is allowed to partners as per maximum limit defined under this section. This clause satisfies the condition for quantum of deduction.
3. It should be related to the period of the partnership deed. If there is another partnership deed for another period then such deed’s provisions will be considered for that period.
4. It is not allowed if tax is paid on presumptive basis under section 44AD or section 44ADA.
5. Remuneration should be within the permissible limits as mentioned below. Please note that this limit is for total salary to all partners and not per partner.

Calculation of book profit

Profit as per Profit & Loss a/c –                                                                                      xxx
Add- Remuneration to partners if debited to Profit and loss a/c
Add- Brought forward business loss, deduction under section 80C
to 80U if debited to profit and loss a/c
Less – Income under house property, capital gain, other
sources if credited to profit and loss a/c
Book Profits                                                                                                                    xxx

Example-

Book profit = Rs. 9 Lakhs
Maximum allowed salary = 3,00,000*90% + 6,00,000*60% = Rs. 6.3 lakhs

Remuneration which is allowed as expenses in the hands of partnership firm will be taxable in the hands of receiving partner as “Income from Business or Profession”.

If such remuneration is not allowed as expense in hands of partnership firm then it will not be taxable in the hands of partners.