TaxTMI 
TaxTMI 
Fee for Delay in Income Tax Return Filing under Indian Income Tax Law : Clause 428 of the Income Tax Bill, 2025 Vs. Section 234F of the Income-tax Act, 1961
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.... as a compliance tool, encouraging timely filing of income tax returns and penalizing non-compliance through monetary consequences. While Section 234F has been operative since assessment year 2018-19, Clause 428 is proposed in the context of a new legislative framework, potentially signaling a shift in the procedural and substantive aspects of income tax administration. This commentary provides a comprehensive legal analysis of Clause 428, delving into its structure, purpose, and practical implications. It then undertakes a detailed comparative analysis with Section 234F, highlighting similarities, differences, and the broader policy context. The discussion is structured to assist practitioners, policymakers, and taxpayers in understanding....
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....ction 263. Detailed Analysis of Clause 428 of the Income Tax Bill, 2025 Text of Clause 428 Clause 428 reads: "Without prejudice to the provisions of this Act, where, a person required to furnish a return of income u/s 263 fails to do so within the time as prescribed in section 263(1) he shall pay, by way of a fee,- * (a) a sum of five thousand rupees, if the total income of such person exceeds five lakh rupees; * (b) a sum not exceeding one thousand rupees in any other case." The clause is accompanied by an explanatory note stating that the assessee is liable to pay a fee for failure to furnish a return of income by the prescribed due date. Key Elements and Structure * Triggering Event: The fee is levied when a person requi....
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....mall taxpayers from disproportionate burdens. Comparative Analysis with Section 234F of the Income-tax Act, 1961 Text and Structure of Section 234F Section 234F (as substituted by the Finance Act, 2021) provides: "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." Earlier, the provision had a two-tier fee structure based on the date of filing (Rs. 5,000 if filed by....
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....is was rationalized to the current structure, which is mirrored in Clause 428. * Discretion in Fee Imposition: Both provisions use the phrase "not exceeding" for the lower-income slab, potentially allowing for administrative discretion. However, in practice, the fee is typically fixed at Rs. 1,000 unless otherwise specified by circular or notification. * Effective Dates and Applicability: Section 234F applies from assessment year 2018-19 onwards. Clause 428 will apply prospectively, subject to the commencement of the new Act. Policy Rationale for Changes The rationalization of the fee structure (from a two-tier to a flat structure) reflects a policy choice to simplify compliance and avoid excessive penalization for late filing. Both p....
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....nsition to the new Act. For Tax Authorities * Simplified fee structure aids in efficient administration and reduces disputes over quantum of liability. * Clear legislative authority to impose fees, with discretion where appropriate, supports fair and effective enforcement. * Need for clarity and guidance on application of "not exceeding" language to ensure uniformity and minimize litigation. For Legal Practitioners * Transitional advice will be required for clients moving from the Section 139 regime to Section 263 under the new Act. * Potential for litigation or representation in cases where fee imposition is disputed, particularly regarding the quantum or applicability of the fee. * Scope for advocacy regarding further ration....