Section 427 — Fee for default in furnishing statements. Successor to s.234E of the 1961 Act.
Section 427 is in Chapter XIX — Collection and Recovery of Tax, which runs from section 390 to section 430.
Sub-section (1) imposes a fee of Rs. 200 for every day of continuing failure where a person does not deliver a statement as required by section 397(3)(b) within the prescribed time. Sub-section (2) limits that fee to the amount of tax deductible or collectible, and requires it to be paid before the statement is delivered. Sub-section (3) imposes a separate fee, also at Rs. 200 for every day the failure continues, on a person required to furnish a statement of financial transaction or reportable account under section 508(1) who fails to furnish it within the time prescribed under section 508(2), subject to a ceiling of Rs. 1,00,000. Both fees are expressed to be without prejudice to the other provisions of the Act.
The daily fee is a charge for late filing rather than a penalty for misconduct — there is no discretion and no requirement of default without reasonable cause — and making it payable before the statement can be delivered is what forces the statement in. The two ceilings keep the daily accrual within a fixed bound for each kind of statement.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Fee for late delivery of a deduction or collection statement | Rs. 200 for every day the failure continues | Runs from the expiry of the time prescribed in section 397(3)(b) for as long as the failure lasts | 427(1) |
| Ceiling on that fee | The amount of tax deductible or collectible | The daily accrual stops at that amount, so the fee is bounded by the statement's own tax | 427(2)(a) |
| Fee for late furnishing of a statement of financial transaction or reportable account | Rs. 200 for every day the failure continues | For a failure to furnish within the time prescribed under section 508(2) | 427(3) |
| Ceiling on the statement of financial transaction fee | Rs. 1,00,000 | A flat cap, unrelated to any tax amount | 427(3) |
The fee accrues by the day and stops only when the statement is filed or the ceiling is reached, so the cost of delay is arithmetic rather than argument. For a deduction or collection statement, the fee has to be paid before the statement can be delivered — the return cannot be filed first and the fee settled later — and it is capped at the tax deductible or collectible in that statement, which means a small-value statement filed very late still carries a bounded fee. The statement of financial transaction fee under sub-section (3) is capped at a flat Rs. 1,00,000 instead. The opening words of both sub-sections preserve any other consequence under the Act, so paying the fee does not close off other provisions.
A deductor is forty days late in delivering a statement under section 397(3)(b) on which the tax deductible was Rs. 6,000. At Rs. 200 a day the fee would come to Rs. 8,000, but sub-section (2)(a) stops it at the amount of tax deductible — Rs. 6,000 — and sub-section (2)(b) requires that Rs. 6,000 to be paid before the statement can be delivered, so the fee comes first and the filing after. A person late with a statement of financial transaction or reportable account under section 508 is on a different track: the same Rs. 200 a day runs under sub-section (3), but the ceiling there is a flat Rs. 1,00,000 unrelated to any tax. Neither fee closes the matter, both sub-sections being expressed to operate without prejudice to the other provisions of the Act.
At the point of filing: the fee under sub-sections (1) and (2) has to be paid before the late statement under section 397(3)(b) can be delivered, so a deductor meets it while trying to file rather than in a later demand. The sub-section (3) fee reaches a reporting person separately, for late furnishing of the statement of financial transaction or reportable account required under section 508.
he shall be liable to pay by way of fee, a sum of Rs. 200 for every day for which such failure continues
See the full 1961 to 2025 concordance.
See the circulars index.