Section 427 Fee for default in furnishing statements.

Income-tax Act, 2025

At a Glance

These documents reproduce two versions of Clause/Section 427 dealing with a fee for default in furnishing statements of tax deducted or collected at source. They matter because they impose a daily fee on persons who fail to deliver such statements within a prescribed time; taxpayers, withholding agents and the tax department are affected. The texts differ only in minor drafting aspects: a cross-reference to another section (393(3)(b) v. 397(3)(b)) and presentation of the amount (spelled out v. numeric). Effective date or enactment/notification timing: Not stated in the document.

Background & Scope

Statutory hooks: both texts are labelled under the Income-tax enactment for 2025 and are described as dealing with the "Levy of fee in certain cases" for "Fee for default in furnishing statements." The provision applies "without prejudice to the provisions of this Act" and operates where "a person fails to deliver or cause to be delivered a statement within the time prescribed" in a cross-referenced subsection. The obligation gives rise to liability to pay, by way of a fee, a daily amount for each day of continued failure; the fee is subject to an upper limit and must be paid before delivery of the statement. No definitions, threshold values other than the fee quantum, or procedural rules are contained in the text provided.

Statutory Provision Mode

Text & Scope

Both texts present the same two-subsection structure:

• Sub-section (1): Imposes liability to pay a fee where a person fails to deliver a prescribed statement within the time prescribed in a specified subsection (cross-referenced).
• Sub-section (2): Sets two limitations/conditions: (a) the fee shall not exceed the amount of tax deductible or collectible; and (b) the fee shall be paid before delivering or causing to be delivered the statement referred to in sub-section (1).

The only textual differences between the two documents are: (i) the cross-reference in sub-section (1) - Document 1 refers to section 397(3)(b), while Document 2 (old Bill version) refers to section 393(3)(b); and (ii) the notation of the fee quantum - Document 1 uses "Rs.200" and Document 2 spells out "two hundred rupees." Apart from these, the operative language is substantively identical.

Interpretation

The provision, as drafted, is a penal/fee provision collateral to other liabilities under the Act: it is expressly "without prejudice to the provisions of this Act," indicating that payment of the fee does not displace other statutory liabilities (such as interest, penalty or prosecution) unless other provisions provide otherwise. The two limits in sub-section (2) indicate a legislative intent to cap the fee at the quantum of tax deductible/collectible and to make payment of the fee a precondition to subsequent compliance (delivery of the statement). The text implies a daily accrual mechanism ("for every day during which the failure continues"), signalling continuing liability until compliance. No legislative intent beyond these textual indicia is set out in the documents.

Exceptions/Provisos

No express exceptions or provisos beyond the two limitations in sub-section (2) are provided in the text. Specific carve-outs (for example, reasonable cause, force majeure, devolved liability) are Not stated in the document.

Illustrations

• Example 1: A withholding agent required to file a statement under the cross-referenced subsection fails to file for 10 days. Under the provision, the agent incurs a fee of Rs.200 per day (subject to the cap in sub-section (2)(a)), payable before filing the statement. (Numbers are illustrative and derived from the text.)
• Example 2: If the tax deductible or collectible for the period is Rs.1,000 but the delay lasts 10 days (which would nominally create Rs.2,000 fee at Rs.200 per day), sub-section (2)(a) limits the fee so it "shall not exceed the amount of tax deductible or collectible" - hence the fee would be capped at Rs.1,000. (Underlying amounts and days are hypothetical but consistent with the statutory mechanism stated.)

Interplay

The provision cross-refers to another subsection which prescribes the time for furnishing the relevant statement: Document 1 cites section 397(3)(b); Document 2 cites section 393(3)(b). The precise interplay with the timeline and procedural rules in the cross-referenced subsection therefore depends on which cross-reference is operative. Interaction with other provisions that impose interest, penalty or prosecution for default is suggested by the opening phrase "Without prejudice to the provisions of this Act," but specific cross-references, rules or notifications governing filing formats, modes of payment of the fee, or exact enforcement mechanisms are Not stated in the document.

Differences Between the (Document 1) Section 427 of the Income-tax Act, 2025 and (Document 2) Clause 427 of the Income-tax Bill, 2025 

Identified differences:

• Cross-reference: Old Bill (Document 2) cross-refers to section 393(3)(b); later text (Document 1) cross-refers to section 397(3)(b).

Practical impact 

• Cross-reference change (393(3)(b) -> 397(3)(b)): The practical significance depends entirely on the substantive content of the cited subsections. Since the documents do not state what section 393(3)(b) or 397(3)(b) contain, the precise impact (for example, who is captured, the time period for filing, or the triggering event) is Not stated in the document. However, at a drafting level, changing the cross-reference alters the statutory trigger and therefore can expand, narrow or otherwise modify the class of persons/timeframe to which the fee applies. Users should therefore treat the cross-reference change as potentially material to applicability and compliance timelines.

Practical Implications

• Compliance and risk areas: Entities required to furnish statements under the cross-referenced subsection face a continuing daily fee for delay. Because the fee accrues daily, delays can rapidly lead to material fees unless the cap in sub-section (2)(a) applies. The precise timing and persons affected hinge on the cited subsection (393(3)(b) or 397(3)(b)), the content of which is Not stated in the document.
• Record-keeping/evidence points suggested by the text: Maintain contemporaneous records of delivery attempts, dates of submission, payment receipts for the fee, calculations showing the cap under sub-section (2)(a), and any correspondence with tax authorities. The requirement that the fee "be paid before delivering ... the statement" implies retention of proof of payment to support lawful filing; procedural mode of payment is Not stated in the document.

Key Takeaways

• Section/Clause 427 imposes a daily fee of Rs.200 for failure to deliver a prescribed statement within the time prescribed in a cross-referenced subsection.
• The fee is capped so that it does not exceed the amount of tax deductible or collectible for the relevant period.
• The fee must be paid before delivering the delayed statement.
• The only substantive drafting difference between the two texts is the cross-reference: 393(3)(b) in the old bill; 397(3)(b) in the later/enacted text-this change may affect applicability or timing, but the documents do not state the content of those sections.
• Spelling out the amount versus using numeric notation has no substantive legal effect; both mean two hundred rupees per day.
• No exceptions, modes of payment, procedural forms, or commencement details are provided in the documents.

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Full Text:

Section 427 Fee for default in furnishing statements.

Daily fee for delayed tax statements requires prepayment before filing and is capped at the tax collectible amount. A mandatory daily fee applies where a person fails to deliver a prescribed statement of tax deducted or collected at source within the time prescribed in a cross referenced subsection; the fee accrues each day until compliance, is capped so it does not exceed the amount of tax deductible or collectible for the period, and must be paid before delivering the delayed statement, without prejudice to other liabilities under the Act.