CHAPTER XVII - COLLECTION AND RECOVERY OF TAX | G.—LEVY OF FEE IN CERTAIN CASES
CHAPTER XVII - COLLECTION AND RECOVERY OF TAX | G.—LEVY OF FEE IN CERTAIN CASES
Section 234E — Fee for Default in Furnishing Statements
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Operative from 1 July 2012 (inserted by the Finance Act, 2012). Applies to TDS statements under section 200(3) and TCS statements under the proviso to section 206C(3).
Finance Act, 2026: Not amended. The Finance Act, 2026 inserts a new section 234-I in this Part but leaves section 234E untouched.
Mechanism: Mandatory fee of Rs. 200 for every day of default in delivering the prescribed TDS/TCS statement, capped at the amount of tax deductible/collectible; computed and collected through the processing intimation under section 200A (TDS) / section 206CB (TCS); distinct from, and additional to, penalty under section 271H.
Litigation profile: Heavily litigated — constitutional validity (upheld) and the section 200A machinery question (the pre/post 1-6-2015 controversy with a Karnataka–Gujarat High Court split).
A. COMMENTARY
Legislative scheme and purpose
Section 234E was inserted by the Finance Act, 2012 with effect from 1 July 2012 to enforce the timely filing of quarterly TDS statements under section 200(3) and TCS statements under the proviso to section 206C(3). A deductor/collector who files the statement late is liable to a fee of Rs. 200 for each day the default continues, the aggregate fee being capped by sub-section (2) at the amount of tax deductible or collectible. The fee must, under sub-section (3), be paid before the belated statement is delivered. The legislative object is twofold: belated TDS/TCS statements delay the population of Form 26AS / the Annual Information Statement, which in turn delays or denies credit and refunds to the deductees; the fee compensates the Department for the additional administrative burden of processing out-of-time statements and operates as the price of the privilege of regularising a late filing.
A fee — neither a tax nor a penalty
The expression deliberately used is "fee", not "penalty". The fee is automatic and consequential: it accrues by operation of law on the mere fact of delay, without any finding of culpability, without a hearing, and without any discretion in the Assessing Officer. This is the feature that distinguishes section 234E from the penalty under section 271H (Rs. 10,000 to Rs. 1,00,000 for the same default), which is discretionary, attracts the reasonable-cause defence under section 273B, and from which section 271H(3) grants immunity where the statement is filed within one year of the prescribed time together with the fee and interest. The two levies can co-exist: the section 234E fee is leviable in addition to any section 271H penalty.
The section 200A machinery controversy (defaults before vs. after 1-6-2015)
When section 234E was introduced in 2012, the processing provision (section 200A) did not authorise the Centralised Processing Cell to compute the fee while processing a TDS statement. That enabling power was supplied only by the Finance Act, 2015, which inserted clause (c) in section 200A(1) (and a parallel clause in section 206CB for TCS) with effect from 1 June 2015. This gave rise to the central controversy: could a section 234E fee be recovered through a section 200A intimation for periods before 1 June 2015? The High Courts split. The Karnataka High Court (Fatheraj Singhvi) held that, absent any enabling clause in section 200A before 1 June 2015, an intimation computing the fee for earlier periods was without authority of law, the 2015 amendment being prospective. The Gujarat High Court (Rajesh Kourani) took the opposite view — section 234E is itself a charging provision that creates the liability independently, and the absence of a machinery provision in section 200A could not defeat the charge. There being no decision of the jurisdictional High Court binding a given Tribunal, most benches of the Tribunal have followed the view favourable to the assessee (per Vegetable Products), deleting fees levied through section 200A intimations for defaults prior to 1 June 2015.
A subsidiary but practically vital question — whether an intimation under section 200A levying a section 234E fee is appealable — has been answered affirmatively. Such an intimation is an order appealable under section 246A, and the Tribunal has condoned delays in filing such appeals where the legal position was evolving. This keeps the merits of the levy (including the pre-1-6-2015 point) open to challenge before the appellate authorities rather than only by writ.
Mandatory character and the narrow space for relief
Once the enabling provision applies (i.e., for defaults on or after 1 June 2015 processed under section 200A), the fee is mandatory and consequential; a plea of reasonable cause is not, as a rule, available against section 234E (in contrast to penalty proceedings under section 271H read with section 273B). Coordinate benches have repeatedly held the levy to be obligatory. A narrow, fact-driven exception has surfaced in recent Tribunal orders granting relief in cases of genuine hardship where the tax was deposited with interest, all statements were filed before the year-end and no prejudice was caused to the Revenue or the deductees — but this turns wholly on facts and should not be read as a general dispensing power. The safer reading remains that the fee is automatic; relief, where given, rests on the absence of any default within the charging period or on the pre-1-6-2015 machinery point.
Practice points
(i) Pay the fee before delivering the belated statement (sub-section (3)); the portal will not accept the statement otherwise. (ii) The fee cannot exceed the TDS/TCS amount (sub-section (2)). (iii) For defaults relating to periods before 1 June 2015, contest the levy on the Fatheraj Singhvi line, subject to the jurisdictional High Court. (iv) Treat the section 200A intimation as appealable under section 246A. (v) Keep section 234E (fee) and section 271H (penalty) analytically distinct; pursue the section 271H(3) immunity separately.
B. STATUTORY TEXT (verbatim)
Reproduced verbatim from the Income-tax Act, 1961 (as amended by the Finance Act, 2025); unchanged by the Finance Act, 2026.
Fee for default in furnishing statements.
234E. (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.
(2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.
(3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.
(4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.
C. AUTHORITIES
The authorities below are grouped by issue. On the headline question the position is settled in the Department's favour (the levy is valid); the live battleground is the pre-1-6-2015 machinery point, on which the High Courts are divided and the Tribunal has largely favoured the assessee.
Constitutional validity — fee, not tax, not penalty
Rashmikant Kundalia & Anr. v. Union of India, [2015] 373 ITR 268 / 54 taxmann.com 200 (Bombay)
Holding Leading decision upholding the vires of section 234E. The fee is not a tax and not a penalty; it is the price of the privilege of being permitted to file a TDS statement beyond the prescribed time — late filing is "regularised" upon payment. There is a clear element of service / quid pro quo (the Department must process out-of-time statements and reconcile credits), so the levy does not offend Article 14 or Article 265 and is neither onerous nor arbitrary.
Use The foundational authority cited in virtually every subsequent order on the nature of the levy.
Dundlod Shikshan Sansthan v. Union of India, [2015] 63 taxmann.com 243 (Rajasthan)
Holding Vires of section 234E upheld; followed Rashmikant Kundalia in repelling the challenge to the daily fee.
Use Reinforces the cross-High-Court consensus on validity.
Lakshminirman Bangalore (P) Ltd. v. Dy. CIT, 2015 SCC OnLine Kar 7315 (Karnataka)
Holding A single Judge of the Karnataka High Court repelled the challenge to the constitutional validity of section 234E.
Use Validity authority from Karnataka — distinct from, and earlier than, the Karnataka High Court's later machinery ruling in Fatheraj Singhvi.
Biswajit Das v. Union of India (Delhi High Court)
Holding The Delhi High Court declined to strike down section 234E, the constitutional validity of the levy having been upheld.
Use Adds the Delhi High Court to the list of High Courts sustaining the provision.
Qatalys Software Technologies (P) Ltd. v. Union of India (Madras High Court)
Holding Section 234E is a late fee at Rs. 200 per day, not a penalty; it is distinct from the discretionary penalty under section 271H, and is not violative of the Constitution.
Use Crisp statement of the fee/penalty distinction from the Madras High Court.
The section 200A machinery question (pre vs. post 1-6-2015) — the High Court split
Fatheraj Singhvi v. Union of India, [2016] 289 CTR 602 / 73 taxmann.com 252 (Karnataka)
Holding Before the Finance Act, 2015 inserted clause (c) in section 200A(1) (w.e.f. 1 June 2015), there was no enabling provision empowering computation of the section 234E fee while processing a TDS statement. Intimations under section 200A levying the fee for periods prior to 1 June 2015 were therefore without authority of law and were quashed; the 2015 amendment is prospective.
Use The leading pro-assessee authority on the pre-1-6-2015 defence.
Rajesh Kourani v. Union of India, [2017] 83 taxmann.com 137 / 297 CTR 502 (Gujarat)
Holding Contra. Section 234E is itself a charging provision creating the liability to fee; section 200A is merely a machinery provision, and "a machinery provision can [neither] override [n]or overrule a charging provision". The fee is leviable independently, and could be collected even before the section 200A enabling clause was inserted.
Use The leading pro-Revenue authority; creates the live High Court conflict.
Sibia Healthcare (P) Ltd. v. Dy. CIT, ITA No. 90/Asr/2015, order dated 9 June 2015 (ITAT Amritsar)
Holding Leading Tribunal decision. As the law stood before 1 June 2015, section 200A permitted only adjustments for arithmetical errors, incorrect claims apparent from the statement, and interest; a section 234E fee was beyond the scope of those permissible adjustments. The levy made through the section 200A intimation was unsustainable and was deleted.
Use The most-followed Tribunal authority for deleting pre-1-6-2015 fees.
Maharashtra Cricket Association v. Dy. CIT, order dated 21 September 2016 (ITAT Pune)
Holding The Assessing Officer is not empowered to charge a section 234E fee by way of an intimation under section 200A in respect of defaults committed before 1 June 2015.
Use Applies Fatheraj Singhvi / Sibia Healthcare at Tribunal level.
Gajanan Constructions v. Dy. CIT (ITAT Pune)
Holding Reviewed the entire law: (i) the fee under section 234E cannot be levied through a section 200A intimation for defaults prior to 1 June 2015; and (ii) an intimation under section 200A is an appealable order, and delay in filing the appeal was condoned.
Use Authority both on the merits and on appealability/limitation.
Mandatory nature and the limits of relief
There is no Supreme Court ruling on section 234E; an SLP against High Court orders on the levy has been entertained, leaving the all-India position not finally settled. The Tribunal authority below is divided in emphasis and turns on facts.
Coordinate-bench line — levy is mandatory and consequential
Holding Several benches have held that, for defaults within the charging period, the section 234E fee is mandatory and consequential and cannot be deleted on the ground of "reasonable cause"; there is no statutory mandate to examine the cause of delay, unlike penalty proceedings under section 271H read with section 273B.
Use States the default rule once the enabling provision applies.
Genuine-hardship line — fact-specific relief (e.g., ITAT Hyderabad, 2025)
Holding Where the deductor had deposited the TDS with interest, had filed all pending quarterly statements before the close of the year, and pleaded genuine (e.g., medical) hardship causing no prejudice to the Revenue or the deductees, the Tribunal has waived the section 234E fee.
Use Illustrates the narrow, fact-driven exception; not a general dispensing power.
CHAPTER XVII - COLLECTION AND RECOVERY OF TAX | G.—LEVY OF FEE IN CERTAIN CASES
Section 234E — Fee for Default in Furnishing Statements
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Operative from 1 July 2012 (inserted by the Finance Act, 2012). Applies to TDS statements under section 200(3) and TCS statements under the proviso to section 206C(3).
Finance Act, 2026: Not amended. The Finance Act, 2026 inserts a new section 234-I in this Part but leaves section 234E untouched.
Mechanism: Mandatory fee of Rs. 200 for every day of default in delivering the prescribed TDS/TCS statement, capped at the amount of tax deductible/collectible; computed and collected through the processing intimation under section 200A (TDS) / section 206CB (TCS); distinct from, and additional to, penalty under section 271H.
Litigation profile: Heavily litigated — constitutional validity (upheld) and the section 200A machinery question (the pre/post 1-6-2015 controversy with a Karnataka–Gujarat High Court split).
A. COMMENTARY
Legislative scheme and purpose
Section 234E was inserted by the Finance Act, 2012 with effect from 1 July 2012 to enforce the timely filing of quarterly TDS statements under section 200(3) and TCS statements under the proviso to section 206C(3). A deductor/collector who files the statement late is liable to a fee of Rs. 200 for each day the default continues, the aggregate fee being capped by sub-section (2) at the amount of tax deductible or collectible. The fee must, under sub-section (3), be paid before the belated statement is delivered. The legislative object is twofold: belated TDS/TCS statements delay the population of Form 26AS / the Annual Information Statement, which in turn delays or denies credit and refunds to the deductees; the fee compensates the Department for the additional administrative burden of processing out-of-time statements and operates as the price of the privilege of regularising a late filing.
A fee — neither a tax nor a penalty
The expression deliberately used is "fee", not "penalty". The fee is automatic and consequential: it accrues by operation of law on the mere fact of delay, without any finding of culpability, without a hearing, and without any discretion in the Assessing Officer. This is the feature that distinguishes section 234E from the penalty under section 271H (Rs. 10,000 to Rs. 1,00,000 for the same default), which is discretionary, attracts the reasonable-cause defence under section 273B, and from which section 271H(3) grants immunity where the statement is filed within one year of the prescribed time together with the fee and interest. The two levies can co-exist: the section 234E fee is leviable in addition to any section 271H penalty.
The section 200A machinery controversy (defaults before vs. after 1-6-2015)
When section 234E was introduced in 2012, the processing provision (section 200A) did not authorise the Centralised Processing Cell to compute the fee while processing a TDS statement. That enabling power was supplied only by the Finance Act, 2015, which inserted clause (c) in section 200A(1) (and a parallel clause in section 206CB for TCS) with effect from 1 June 2015. This gave rise to the central controversy: could a section 234E fee be recovered through a section 200A intimation for periods before 1 June 2015? The High Courts split. The Karnataka High Court (Fatheraj Singhvi) held that, absent any enabling clause in section 200A before 1 June 2015, an intimation computing the fee for earlier periods was without authority of law, the 2015 amendment being prospective. The Gujarat High Court (Rajesh Kourani) took the opposite view — section 234E is itself a charging provision that creates the liability independently, and the absence of a machinery provision in section 200A could not defeat the charge. There being no decision of the jurisdictional High Court binding a given Tribunal, most benches of the Tribunal have followed the view favourable to the assessee (per Vegetable Products), deleting fees levied through section 200A intimations for defaults prior to 1 June 2015.
Appealability of the section 200A intimation
A subsidiary but practically vital question — whether an intimation under section 200A levying a section 234E fee is appealable — has been answered affirmatively. Such an intimation is an order appealable under section 246A, and the Tribunal has condoned delays in filing such appeals where the legal position was evolving. This keeps the merits of the levy (including the pre-1-6-2015 point) open to challenge before the appellate authorities rather than only by writ.
Mandatory character and the narrow space for relief
Once the enabling provision applies (i.e., for defaults on or after 1 June 2015 processed under section 200A), the fee is mandatory and consequential; a plea of reasonable cause is not, as a rule, available against section 234E (in contrast to penalty proceedings under section 271H read with section 273B). Coordinate benches have repeatedly held the levy to be obligatory. A narrow, fact-driven exception has surfaced in recent Tribunal orders granting relief in cases of genuine hardship where the tax was deposited with interest, all statements were filed before the year-end and no prejudice was caused to the Revenue or the deductees — but this turns wholly on facts and should not be read as a general dispensing power. The safer reading remains that the fee is automatic; relief, where given, rests on the absence of any default within the charging period or on the pre-1-6-2015 machinery point.
Practice points
(i) Pay the fee before delivering the belated statement (sub-section (3)); the portal will not accept the statement otherwise. (ii) The fee cannot exceed the TDS/TCS amount (sub-section (2)). (iii) For defaults relating to periods before 1 June 2015, contest the levy on the Fatheraj Singhvi line, subject to the jurisdictional High Court. (iv) Treat the section 200A intimation as appealable under section 246A. (v) Keep section 234E (fee) and section 271H (penalty) analytically distinct; pursue the section 271H(3) immunity separately.
B. STATUTORY TEXT (verbatim)
Reproduced verbatim from the Income-tax Act, 1961 (as amended by the Finance Act, 2025); unchanged by the Finance Act, 2026.
Fee for default in furnishing statements.
234E. (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.
(2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.
(3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.
(4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.
C. AUTHORITIES
The authorities below are grouped by issue. On the headline question the position is settled in the Department's favour (the levy is valid); the live battleground is the pre-1-6-2015 machinery point, on which the High Courts are divided and the Tribunal has largely favoured the assessee.
Constitutional validity — fee, not tax, not penalty
Rashmikant Kundalia & Anr. v. Union of India, [2015] 373 ITR 268 / 54 taxmann.com 200 (Bombay)
Holding Leading decision upholding the vires of section 234E. The fee is not a tax and not a penalty; it is the price of the privilege of being permitted to file a TDS statement beyond the prescribed time — late filing is "regularised" upon payment. There is a clear element of service / quid pro quo (the Department must process out-of-time statements and reconcile credits), so the levy does not offend Article 14 or Article 265 and is neither onerous nor arbitrary.
Use The foundational authority cited in virtually every subsequent order on the nature of the levy.
Dundlod Shikshan Sansthan v. Union of India, [2015] 63 taxmann.com 243 (Rajasthan)
Holding Vires of section 234E upheld; followed Rashmikant Kundalia in repelling the challenge to the daily fee.
Use Reinforces the cross-High-Court consensus on validity.
Lakshminirman Bangalore (P) Ltd. v. Dy. CIT, 2015 SCC OnLine Kar 7315 (Karnataka)
Holding A single Judge of the Karnataka High Court repelled the challenge to the constitutional validity of section 234E.
Use Validity authority from Karnataka — distinct from, and earlier than, the Karnataka High Court's later machinery ruling in Fatheraj Singhvi.
Biswajit Das v. Union of India (Delhi High Court)
Holding The Delhi High Court declined to strike down section 234E, the constitutional validity of the levy having been upheld.
Use Adds the Delhi High Court to the list of High Courts sustaining the provision.
Qatalys Software Technologies (P) Ltd. v. Union of India (Madras High Court)
Holding Section 234E is a late fee at Rs. 200 per day, not a penalty; it is distinct from the discretionary penalty under section 271H, and is not violative of the Constitution.
Use Crisp statement of the fee/penalty distinction from the Madras High Court.
The section 200A machinery question (pre vs. post 1-6-2015) — the High Court split
Fatheraj Singhvi v. Union of India, [2016] 289 CTR 602 / 73 taxmann.com 252 (Karnataka)
Holding Before the Finance Act, 2015 inserted clause (c) in section 200A(1) (w.e.f. 1 June 2015), there was no enabling provision empowering computation of the section 234E fee while processing a TDS statement. Intimations under section 200A levying the fee for periods prior to 1 June 2015 were therefore without authority of law and were quashed; the 2015 amendment is prospective.
Use The leading pro-assessee authority on the pre-1-6-2015 defence.
Rajesh Kourani v. Union of India, [2017] 83 taxmann.com 137 / 297 CTR 502 (Gujarat)
Holding Contra. Section 234E is itself a charging provision creating the liability to fee; section 200A is merely a machinery provision, and "a machinery provision can [neither] override [n]or overrule a charging provision". The fee is leviable independently, and could be collected even before the section 200A enabling clause was inserted.
Use The leading pro-Revenue authority; creates the live High Court conflict.
Sibia Healthcare (P) Ltd. v. Dy. CIT, ITA No. 90/Asr/2015, order dated 9 June 2015 (ITAT Amritsar)
Holding Leading Tribunal decision. As the law stood before 1 June 2015, section 200A permitted only adjustments for arithmetical errors, incorrect claims apparent from the statement, and interest; a section 234E fee was beyond the scope of those permissible adjustments. The levy made through the section 200A intimation was unsustainable and was deleted.
Use The most-followed Tribunal authority for deleting pre-1-6-2015 fees.
Maharashtra Cricket Association v. Dy. CIT, order dated 21 September 2016 (ITAT Pune)
Holding The Assessing Officer is not empowered to charge a section 234E fee by way of an intimation under section 200A in respect of defaults committed before 1 June 2015.
Use Applies Fatheraj Singhvi / Sibia Healthcare at Tribunal level.
Gajanan Constructions v. Dy. CIT (ITAT Pune)
Holding Reviewed the entire law: (i) the fee under section 234E cannot be levied through a section 200A intimation for defaults prior to 1 June 2015; and (ii) an intimation under section 200A is an appealable order, and delay in filing the appeal was condoned.
Use Authority both on the merits and on appealability/limitation.
Mandatory nature and the limits of relief
There is no Supreme Court ruling on section 234E; an SLP against High Court orders on the levy has been entertained, leaving the all-India position not finally settled. The Tribunal authority below is divided in emphasis and turns on facts.
Coordinate-bench line — levy is mandatory and consequential
Holding Several benches have held that, for defaults within the charging period, the section 234E fee is mandatory and consequential and cannot be deleted on the ground of "reasonable cause"; there is no statutory mandate to examine the cause of delay, unlike penalty proceedings under section 271H read with section 273B.
Use States the default rule once the enabling provision applies.
Genuine-hardship line — fact-specific relief (e.g., ITAT Hyderabad, 2025)
Holding Where the deductor had deposited the TDS with interest, had filed all pending quarterly statements before the close of the year, and pleaded genuine (e.g., medical) hardship causing no prejudice to the Revenue or the deductees, the Tribunal has waived the section 234E fee.
Use Illustrates the narrow, fact-driven exception; not a general dispensing power.