Section 428 Fee for default in furnishing return of income.

Income-tax Act, 2025

At a Glance

The documents are two textual versions of Clause/Section 428 concerning a fee for default in furnishing a return of income: (1) Section 428 of the Income-tax Act, 2025 (final enacted text as presented) and (2) Clause 428 of the Income Tax Bill, 2025 - Old Version (bill draft). They prescribe monetary fees for failure to file a return u/s 263 by the prescribed time. The change affects taxpayers required to file returns; the department's charging mechanism is unchanged in principle but the fee thresholds and phrasing differ. Effective date or enactment date: Not stated in the document.

Background & Scope

Statutory hooks: the provision operates "without prejudice to the provisions of this Act" and applies where a person is "required to furnish a return of income u/s 263" and fails to do so "within such time as may be prescribed in section 263(1)" (Bill and enacted text). The texts set out mandatory fee amounts tied to total income thresholds. Definitions or explanatory notes: Not stated in the document beyond the reference to "total income" and the cross-reference to section 263(1).

Statutory Provision Mode

Text & Scope

Enacted text (Section 428) provides:

• Where a person required to furnish a return u/s 263 fails to do so within the time prescribed in section 263(1), he shall pay, by way of a fee,-- (a) a sum not exceeding Rs. 1000, if the total income of such person does not exceed Rs. 500000; (b) a sum of Rs.5000, in any other case.

Old Bill text (Clause 428) provides:

• Where a person required to furnish a return 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.

Coverage: Both texts target persons mandated to file returns u/s 263 and link fee quantum to the taxpayer's total income (threshold five lakh rupees). The provisions are penal/fee impositions distinct from other sanctions under the Act ("without prejudice" clause).

Interpretation

The texts indicate a clear legislative intent to impose a graded, amount-specific fee for late/non-filing tied to an income threshold. The enacted text uses different sequencing and a marginally different phrasing ("does not exceed Rs. 500000" versus "exceeds five lakh rupees" in the Bill). Interpretive principle indicated: the higher fee applies to higher-income taxpayers (those above the threshold) and a lower fee (or capped amount) applies to lower-income taxpayers. Specific intent regarding policy rationale (deterrence, revenue, proportionality) is Not stated in the document.

Exceptions/Provisos

No provisos, carve-outs, exemptions, or procedural stipulations are provided in either text beyond the income threshold and cross-reference to section 263(1). Any interaction with waiver powers, review, remission, or subsequent quantification mechanisms is Not stated in the document.

Illustrations

• Example 1 (consistent with enacted text): A person with total income of Rs. 4,50,000 who fails to file by the prescribed time may be required to pay a fee not exceeding Rs. 1,000.
• Example 2 (consistent with enacted text): A person with total income of Rs. 8,00,000 who fails to file by the prescribed time shall pay a fee of Rs. 5,000.
• Example 3 (consistent with Bill text): Under the Bill wording, an individual with total income exceeding Rs. 5,00,000 would be subject to Rs. 5,000; one with total income below or equal to Rs. 5,00,000 would be subject to a fee not exceeding Rs. 1,000.

Interplay

Both provisions cross-reference section 263(1) for the filing time; any interaction with other provisions that determine assessment, penalty, prosecution, or compoundable offences is Not stated in the document. The phrase "Without prejudice to the provisions of this Act" signals that the fee is additional to other remedies or penalties available elsewhere in the Act, but specific interactions are Not stated in the document.

Comparison Summary - Differences and Practical Impact

Action Points

• Taxpayers should note the two-tier fee structure and the five lakh threshold when assessing late-filing exposure. (Operational procedures for imposition: Not stated in the document.)
• Advisers should track whether assessing officers apply a specific amount up to the Rs.1,000 cap for lower-income filers, since discretion is preserved in the cap. (Guidance/forms: Not stated in the document.)
• Departmental practice notes or rules explaining assessment, demand, and remittance mechanics would be needed for implementation; such materials are Not stated in the document.

Practical Implications

• Difference in threshold application: The Bill's text makes the higher fee (Rs. 5,000) expressly applicable where total income "exceeds five lakh rupees," and a lower fee (not exceeding Rs. 1,000) in any other case. The enacted text flips the conditional language: it prescribes "a sum not exceeding Rs. 1000, if the total income of such person does not exceed Rs. 500000; (b) a sum of Rs.5000, in any other case." Practically, both texts produce the same fee outcomes tied to the five lakh threshold, but the enacted text explicitly caps the lower bracket fee "not exceeding Rs. 1000" whereas the Bill placed the cap language in clause (b) for the lower bracket. The practical impact: outcome parity (lower-income persons capped at Rs.1,000; higher-income persons pay Rs.5,000) but the enacted text may be read to emphasize a capped discretion in the lower slab.
• Discretion and certainty: The enacted text's use of "not exceeding Rs. 1000" for the lower slab preserves an element of discretion (a fee up to Rs. 1,000) for authorities. The Bill's wording "a sum not exceeding one thousand rupees in any other case" (placed as clause (b)) likewise preserves discretion. Practical impact: tax authorities retain the ability to levy any amount up to the cap for lower-income taxpayers; for higher-income taxpayers the fee is fixed at Rs. 5,000 under both texts.
• Drafting and enforcement clarity: The enacted sequencing (lower slab first; higher slab second) reduces potential misreading about which bracket attracts the cap. Practical impact: slightly improved statutory clarity that may marginally reduce litigation over interpretive sequencing, but substantive effect on taxpayers' liabilities is minimal.
• Revenue and compliance incentives: Both versions impose a two-tiered monetary consequence intended to deter late filing, with greater deterrence on higher-income filers. Practical revenue impact and behavioural effects are Not stated in the document (no empirical estimates provided).
• Administrative procedures, assessment, demand issuance, remission, or appeal routes for the fee: Not stated in the document.

Key Takeaways

• Both the Bill (old version) and the enacted Section 428 create a two-tier fee for failure to furnish a return u/s 263(1), with a five lakh rupee income threshold distinguishing the tiers.
• Higher-income taxpayers (total income above Rs. 5,00,000) are liable to a fixed fee of Rs. 5,000 in both texts.
• Lower-income taxpayers (total income at or below Rs. 5,00,000) face a fee capped at Rs. 1,000; the enacted text phrases the cap within the first clause, highlighting the cap expressly for that slab.
• Substantively, both versions produce the same fee liability outcomes; differences are primarily drafting/sequence and placement of "not exceeding" language, which may affect perceived discretion for the lower slab.
• No procedural, remedial, or enforcement detail is provided in either document; such matters remain Not stated in the document.
• The provision is qualified by "Without prejudice to the provisions of this Act," indicating the fee is additional to other powers-specific interactions are Not stated in the document.
• Effective date, legislative history, and policy rationale are Not stated in the document.

Full Text:

Section 428 Fee for default in furnishing return of income.