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 234F — Fee for Default in Furnishing Return of Income
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Operative for returns required for assessment year 2018-19 onwards (inserted by the Finance Act, 2018). The two-tier amount was rationalised by the Finance Act, 2021 (the Rs. 10,000 slab fell away when the belated-return window under section 139(4) was compressed); the present amount is Rs. 5,000, with a Rs. 1,000 cap for total income up to Rs. 5 lakh.
Finance Act, 2026: Not amended. But the Finance Act, 2026 inserts a companion fee — the new section 234-I (fee for a revised return filed in the tail of the extended section 139(5) window) — which should be read alongside section 234F.
Mechanism: Automatic fee for furnishing the return of income under section 139 beyond the section 139(1) due date; Rs. 5,000, capped at Rs. 1,000 where total income does not exceed Rs. 5 lakh; collected through self-assessment under section 140A and through processing under section 143(1).
Litigation profile: Light — essentially one constitutional challenge (rejected) and interpretive questions about when a person is "required to furnish" a return.
A. COMMENTARY
Legislative scheme
Section 234F was inserted by the Finance Act, 2018 for returns required to be furnished for assessment year 2018-19 onwards. It replaced the earlier discretionary penalty for non-filing under section 271F (which was made inapplicable from the same date) with an automatic, self-operating fee. The fee is triggered the moment a person who is "required to furnish a return of income under section 139" files it after the due date in section 139(1). The amount is a flat Rs. 5,000, reduced by the proviso to a maximum of Rs. 1,000 where total income does not exceed Rs. 5 lakh. Being part of self-assessment, the fee is payable under section 140A and is also adjusted in processing under section 143(1).
"A person required to furnish a return under section 139" — the threshold condition
The charge is conditioned on the person being obliged to file under section 139 — whether under section 139(1) or under its provisos (for example, the proviso casting an obligation on persons entering into specified high-value transactions or holding foreign assets). Where there is no such obligation — typically where total income is below the basic exemption limit and none of the provisos applies — section 234F is, on its terms, not attracted even if a return is in fact filed late and voluntarily. Tribunal benches have given effect to this textual condition. The practitioner must therefore first establish whether a filing obligation existed before conceding the fee.
Evolution of the amount
As originally enacted, section 234F prescribed Rs. 5,000 for returns filed up to 31 December of the assessment year and Rs. 10,000 thereafter, with the Rs. 1,000 cap for small incomes. When the Finance Act, 2021 compressed the time for filing a belated return under section 139(4) (advancing it to 31 December of the assessment year), the higher Rs. 10,000 slab became otiose and the provision now reads as a single Rs. 5,000 fee with the Rs. 1,000 cap. The verbatim text below reflects the current, rationalised form.
Fee, not penalty; constitutionality
As with section 234E, the levy is a fee and not a penalty: it is automatic, requires no satisfaction of mens rea, carries no reasonable-cause defence and is not discretionary. Its constitutional validity has been upheld, the "fee" being treated as consideration for the services the Department renders in handling, correlating and processing returns (including the machinery for refunds). The classification of all late filers as a single class has been held to be a reasonable classification not offending Article 14.
Interaction with the updated return and the new section 234-I
Section 234F sits within a graduated architecture of return-related levies. A person who misses the section 139(1) date but files within the belated/revised windows pays the section 234F fee; a person who later files an updated return under section 139(8A) pays additional income-tax under section 140B (which subsumes the section 234F fee in its computation); and, from 1 March 2026, a person who files a revised return under the extended section 139(5) window in its last quarter pays the new section 234-I fee. The three should be read together to avoid double counting and to identify the correct levy for a given filing route.
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 return of income.
234F. (1) Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of the said section, he shall pay, by way of a fee, a sum of five thousand rupees :
Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.
(2) The provisions of this section shall apply in respect of return of income required to be furnished for the assessment year commencing on or after the 1st day of April, 2018.
C. AUTHORITIES
Direct authority is sparse — chiefly the Madras High Court decision on validity, supported by the fee/tax constitutional jurisprudence and by section 234E reasoning applied by analogy. Where authority is genuinely absent (e.g., on the "not required to file" question at appellate-court level), that is flagged candidly.
Constitutional validity
K. Nirai Mathi Azhagan v. Union of India, [2020] 423 ITR 339 / 316 CTR 23 (Madras)
Holding Public interest challenge to section 234F rejected. The fee is charged in consideration of the services the Department renders, including correlating returns and finalising refunds; there is sufficient quid pro quo. Treating all defaulters who file late as one class is a reasonable classification and does not offend Article 14, and the provision is not violative of any provision of the Act or the Constitution.
Use The leading — and presently the only High Court — authority directly on section 234F.
Rashmikant Kundalia v. Union of India, [2015] 373 ITR 268 (Bombay) — applied by analogy
Holding Decided on the cognate section 234E, this decision's reasoning — that a late-filing "fee" with an element of service is neither a tax nor a penalty and is constitutionally valid — is routinely applied to section 234F.
There is no Supreme Court ruling and no settled High Court authority on the "not required to furnish a return" point; reliance is on the statutory text and Tribunal orders.
The "not required to file" principle (Tribunal level)
Holding Because the charge applies only to a person "required to furnish a return ... under section 139", the Tribunal has accepted that no section 234F fee arises where the assessee was under no obligation to file (income below the threshold and no proviso engaged), even if a return was filed belatedly.
Use Supports contesting an automatically-levied fee on the threshold condition; verify the current obligation matrix (including the section 139(1) provisos) for the year in issue.
Constitutional backdrop on the nature of a "fee"
These Supreme Court authorities define when an exaction is a valid "fee" rather than a tax; they underpin the validity reasoning for sections 234E, 234F and 234G alike.
Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, AIR 1954 SC 282 (7-Judge Bench)
Holding The locus classicus distinguishing tax from fee: a tax is a compulsory exaction for public purposes with no necessary correlation to services; a fee is a charge for a special service rendered, ordinarily with an element of quid pro quo.
Use Foundational test invoked to characterise the section 234-series levies as fees.
Kewal Krishan Puri v. State of Punjab, (1980) 1 SCC 416 / AIR 1980 SC 1008 (Constitution Bench)
Holding A fee requires a correlation — quid pro quo — between the payer and the special services rendered, though a mathematical equivalence is not demanded.
Use Frames the quid pro quo enquiry relied on in Rashmikant Kundalia and K. Nirai Mathi Azhagan.
Sreenivasa General Traders v. State of Andhra Pradesh, (1983) 4 SCC 353 / AIR 1983 SC 1246
Holding The traditional strict quid pro quo test has been diluted; an element of quid pro quo in the strict sense is not always a sine qua non for a fee — a broad correlation between the levy and the services suffices.
Use Explains why the modest "service" rationale in the late-fee cases is constitutionally adequate.
CHAPTER XVII - COLLECTION AND RECOVERY OF TAX | G.—LEVY OF FEE IN CERTAIN CASES
Section 234F — Fee for Default in Furnishing Return of Income
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Operative for returns required for assessment year 2018-19 onwards (inserted by the Finance Act, 2018). The two-tier amount was rationalised by the Finance Act, 2021 (the Rs. 10,000 slab fell away when the belated-return window under section 139(4) was compressed); the present amount is Rs. 5,000, with a Rs. 1,000 cap for total income up to Rs. 5 lakh.
Finance Act, 2026: Not amended. But the Finance Act, 2026 inserts a companion fee — the new section 234-I (fee for a revised return filed in the tail of the extended section 139(5) window) — which should be read alongside section 234F.
Mechanism: Automatic fee for furnishing the return of income under section 139 beyond the section 139(1) due date; Rs. 5,000, capped at Rs. 1,000 where total income does not exceed Rs. 5 lakh; collected through self-assessment under section 140A and through processing under section 143(1).
Litigation profile: Light — essentially one constitutional challenge (rejected) and interpretive questions about when a person is "required to furnish" a return.
A. COMMENTARY
Legislative scheme
Section 234F was inserted by the Finance Act, 2018 for returns required to be furnished for assessment year 2018-19 onwards. It replaced the earlier discretionary penalty for non-filing under section 271F (which was made inapplicable from the same date) with an automatic, self-operating fee. The fee is triggered the moment a person who is "required to furnish a return of income under section 139" files it after the due date in section 139(1). The amount is a flat Rs. 5,000, reduced by the proviso to a maximum of Rs. 1,000 where total income does not exceed Rs. 5 lakh. Being part of self-assessment, the fee is payable under section 140A and is also adjusted in processing under section 143(1).
"A person required to furnish a return under section 139" — the threshold condition
The charge is conditioned on the person being obliged to file under section 139 — whether under section 139(1) or under its provisos (for example, the proviso casting an obligation on persons entering into specified high-value transactions or holding foreign assets). Where there is no such obligation — typically where total income is below the basic exemption limit and none of the provisos applies — section 234F is, on its terms, not attracted even if a return is in fact filed late and voluntarily. Tribunal benches have given effect to this textual condition. The practitioner must therefore first establish whether a filing obligation existed before conceding the fee.
Evolution of the amount
As originally enacted, section 234F prescribed Rs. 5,000 for returns filed up to 31 December of the assessment year and Rs. 10,000 thereafter, with the Rs. 1,000 cap for small incomes. When the Finance Act, 2021 compressed the time for filing a belated return under section 139(4) (advancing it to 31 December of the assessment year), the higher Rs. 10,000 slab became otiose and the provision now reads as a single Rs. 5,000 fee with the Rs. 1,000 cap. The verbatim text below reflects the current, rationalised form.
Fee, not penalty; constitutionality
As with section 234E, the levy is a fee and not a penalty: it is automatic, requires no satisfaction of mens rea, carries no reasonable-cause defence and is not discretionary. Its constitutional validity has been upheld, the "fee" being treated as consideration for the services the Department renders in handling, correlating and processing returns (including the machinery for refunds). The classification of all late filers as a single class has been held to be a reasonable classification not offending Article 14.
Interaction with the updated return and the new section 234-I
Section 234F sits within a graduated architecture of return-related levies. A person who misses the section 139(1) date but files within the belated/revised windows pays the section 234F fee; a person who later files an updated return under section 139(8A) pays additional income-tax under section 140B (which subsumes the section 234F fee in its computation); and, from 1 March 2026, a person who files a revised return under the extended section 139(5) window in its last quarter pays the new section 234-I fee. The three should be read together to avoid double counting and to identify the correct levy for a given filing route.
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 return of income.
234F. (1) Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of the said section, he shall pay, by way of a fee, a sum of five thousand rupees :
Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.
(2) The provisions of this section shall apply in respect of return of income required to be furnished for the assessment year commencing on or after the 1st day of April, 2018.
C. AUTHORITIES
Direct authority is sparse — chiefly the Madras High Court decision on validity, supported by the fee/tax constitutional jurisprudence and by section 234E reasoning applied by analogy. Where authority is genuinely absent (e.g., on the "not required to file" question at appellate-court level), that is flagged candidly.
Constitutional validity
K. Nirai Mathi Azhagan v. Union of India, [2020] 423 ITR 339 / 316 CTR 23 (Madras)
Holding Public interest challenge to section 234F rejected. The fee is charged in consideration of the services the Department renders, including correlating returns and finalising refunds; there is sufficient quid pro quo. Treating all defaulters who file late as one class is a reasonable classification and does not offend Article 14, and the provision is not violative of any provision of the Act or the Constitution.
Use The leading — and presently the only High Court — authority directly on section 234F.
Rashmikant Kundalia v. Union of India, [2015] 373 ITR 268 (Bombay) — applied by analogy
Holding Decided on the cognate section 234E, this decision's reasoning — that a late-filing "fee" with an element of service is neither a tax nor a penalty and is constitutionally valid — is routinely applied to section 234F.
Use Bridges the better-developed section 234E jurisprudence to section 234F.
Threshold of liability — candour
There is no Supreme Court ruling and no settled High Court authority on the "not required to furnish a return" point; reliance is on the statutory text and Tribunal orders.
The "not required to file" principle (Tribunal level)
Holding Because the charge applies only to a person "required to furnish a return ... under section 139", the Tribunal has accepted that no section 234F fee arises where the assessee was under no obligation to file (income below the threshold and no proviso engaged), even if a return was filed belatedly.
Use Supports contesting an automatically-levied fee on the threshold condition; verify the current obligation matrix (including the section 139(1) provisos) for the year in issue.
Constitutional backdrop on the nature of a "fee"
These Supreme Court authorities define when an exaction is a valid "fee" rather than a tax; they underpin the validity reasoning for sections 234E, 234F and 234G alike.
Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, AIR 1954 SC 282 (7-Judge Bench)
Holding The locus classicus distinguishing tax from fee: a tax is a compulsory exaction for public purposes with no necessary correlation to services; a fee is a charge for a special service rendered, ordinarily with an element of quid pro quo.
Use Foundational test invoked to characterise the section 234-series levies as fees.
Kewal Krishan Puri v. State of Punjab, (1980) 1 SCC 416 / AIR 1980 SC 1008 (Constitution Bench)
Holding A fee requires a correlation — quid pro quo — between the payer and the special services rendered, though a mathematical equivalence is not demanded.
Use Frames the quid pro quo enquiry relied on in Rashmikant Kundalia and K. Nirai Mathi Azhagan.
Sreenivasa General Traders v. State of Andhra Pradesh, (1983) 4 SCC 353 / AIR 1983 SC 1246
Holding The traditional strict quid pro quo test has been diluted; an element of quid pro quo in the strict sense is not always a sine qua non for a fee — a broad correlation between the levy and the services suffices.
Use Explains why the modest "service" rationale in the late-fee cases is constitutionally adequate.