Fee for default in furnishing return of income, audited accounts and reports

Section 428 — FEE FOR DEFAULT IN FURNISHING RETURN OF INCOME, AUDITED ACCOUNTS AND REPORTS

Section 428 of the Income-tax Act, 2025 corresponds to s. 234F of the Income-tax Act, 1961.

STATUTORY ARCHITECTURE

Section 428 was substituted by the Finance Act, 2026, w.e.f. 1-4-2026. In its current form it levies a fee, without prejudice to the other provisions of the Act, on any person who commits one of four defaults: a late return of income, a return under s. 263(5) furnished beyond nine months from the end of the relevant tax year, failure to get accounts audited and furnish the audit report required by s. 63, and failure to furnish an accountant's report required by s. 172.

Pre-2026 position: before substitution, s. 428 was headed "Fee for default in furnishing return of income" and covered only a person required to furnish a return under s. 263 who failed to do so within the time prescribed in s. 263(1). The fee was a sum not exceeding ₹1000 where total income did not exceed ₹500000, and ₹5000 in any other case.

KEY ELEMENTS

• Clause (a) — late return: failure to furnish a return under s. 263 within the due date specified under s. 263(1): ₹1000 if total income does not exceed ₹500000; ₹5000 in any other case.
• Clause (b) — revised return under s. 263(5): furnished beyond nine months from the end of the relevant tax year: ₹1000 if total income does not exceed ₹500000; ₹5000 in any other case.
• Clause (c) — audit under s. 63: failure to get accounts audited for any tax year or years and furnish the audit report: ₹75000 for a delay up to one month for which the failure continues; ₹150000 thereafter.
• Clause (d) — report under s. 172: failure to furnish an accountant's report: ₹50000 for a delay up to one month for which the failure continues; ₹100000 thereafter.

CHANGES FROM THE 1961 ACT

Clause (a) corresponds to s. 234F of the 1961 Act, which levied ₹5000 for failure to furnish a return under s. 139 within the time prescribed in s. 139(1), with the fee not exceeding ₹1000 where total income did not exceed five lakh rupees. Under clause (a) the lower amount is stated as "a sum of ₹1000", not as a ceiling. Clause (b) has no counterpart in s. 234F. Clauses (c) and (d) levy fees for the audit-report and s. 172 report defaults that were penalties under s. 271B and s. 271BA of the 1961 Act.

PRACTITIONER NOTES

• The lower fee in clauses (a) and (b) turns on whether total income exceeds ₹500000.
• Clause (b) applies to a revised return under s. 263(5), which may now be furnished up to twelve months from the end of the tax year, subject to s. 428(b); a revision made after nine months attracts the fee. Clause (a) applies separately to an original return furnished after the s. 263(1) due date.
• Under clauses (c) and (d), the amount steps up once the failure continues beyond one month.

CROSS-REFERENCES

• s. 263, s. 263(1) — clause (a).
• s. 263(5) — clause (b).
• s. 63 — clause (c).
• s. 172 — clause (d).
• s. 234F, s. 271B and s. 271BA of the 1961 Act — the earlier fee and penalties.