Fee for default in furnishing statements

Section 427 — FEE FOR DEFAULT IN FURNISHING STATEMENTS

Section 427 of the Income-tax Act, 2025 corresponds to s. 234E of the Income-tax Act, 1961.

STATUTORY ARCHITECTURE

Section 427 was substituted by the Finance Act, 2026, w.e.f. 1-4-2026. The substituted section levies a daily fee for two kinds of default. The first is a failure to deliver, or cause to be delivered, a statement as per s. 397(3)(b) within the time prescribed there. The second, added by the substitution, is a failure by a person required to furnish a statement of financial transaction or reportable account under s. 508(1) to furnish it within the time prescribed under s. 508(2). In each case the fee is ₹200 for every day for which the failure continues, subject to a ceiling.

KEY ELEMENTS

• Sub-section (1): a person who fails to deliver or cause to be delivered a statement as per s. 397(3)(b) within the time prescribed therein is liable to pay a fee of ₹200 for every day for which the failure continues.
• Sub-section (2)(a): the fee under sub-section (1) shall not exceed the amount of tax deductible or collectible.
• Sub-section (2)(b): the fee under sub-section (1) must be paid before delivering or causing to be delivered the statement.
• Sub-section (3): a person required to furnish a statement of financial transaction or reportable account under s. 508(1) who fails to furnish it within the time prescribed under s. 508(2) is liable to pay a fee of ₹200 for every day for which the failure continues, not exceeding ₹1,00,000.

CHANGES FROM THE 1961 ACT

Pre-2026 position: before its substitution, s. 427 contained only two sub-sections. They levied ₹200 for every day of failure to deliver a statement within the time prescribed in s. 397(3)(b), capped at the tax deductible or collectible and payable before delivery. The substitution adds sub-section (3).

Compared with s. 234E of the 1961 Act: sub-sections (1) and (2) of s. 427 correspond to s. 234E(1) to (3) of the 1961 Act, with the cap and the payment condition now combined as clauses (a) and (b) of sub-section (2). The reference to s. 200(3) or the proviso to s. 206C(3) of the 1961 Act is replaced by s. 397(3)(b). The daily rate of two hundred rupees is unchanged. Section 234E(4) of the 1961 Act, which applied the section to statements to be delivered on or after 1 July 2012, has no counterpart. Sub-section (3) has no counterpart in s.234E of the 1961 Act. It replaces the penalty of ₹500 a day formerly in s.454(1) of the 2025 Act (from s.271FA of the 1961 Act); s.454, substituted by the same Act, now penalises only a failure to furnish within the period in a notice under s.508(7), at ₹1,000 a day up to ₹1,00,000.

PRACTITIONER NOTES

• Under sub-section (2)(b) the fee must be paid before the statement is delivered.
• For statements of financial transaction or reportable account, the cap is a fixed ₹1,00,000 rather than a tax-linked amount.
• Both sub-sections (1) and (3) operate "without prejudice to the provisions of this Act", so the fee stands alongside, not in place of, the other provisions of the Act.

CROSS-REFERENCES

• s. 397(3)(b) — the statement, and the time for delivering it, referred to in sub-section (1).
• s. 508(1) and (2) — the statement of financial transaction or reportable account, and the time for furnishing it, in sub-section (3).
• s. 234E of the 1961 Act — the corresponding provision.