Late Fees under section 427 Income Tax Act 2025
Under Section 427 of the Income-tax Act, 2025, a late fee is levied when a person fails to file or deliver a Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) statement within the prescribed due date.
Here are the key points regarding this late fee:
- Daily Fee Amount: The defaulter is liable to pay a fee of ₹200 for every day during which the failure to file the statement continues.
- Maximum Cap: To provide relief, the law caps the maximum penalty. The total accumulated late fee cannot exceed the actual amount of tax that was required to be deducted or collected in that statement.
- Pre-condition for Filing: The taxpayer is required to pay this accumulated late fee before they are allowed to successfully deliver or file the delayed statement.
- Applicability to Specific Forms: This late fee applies to standard quarterly TDS/TCS returns, as well as specific unified challan-cum-statements like Form No. 141 (which is used for reporting TDS on property purchases or high-value rent).
Example of Late Fees under section 427
under Section 427, the late fee is calculated at ₹200 for every day the delay continues, but it is strictly capped so that it never exceeds the total TDS/TCS amount required to be reported in that statement.
Here are two practical examples to explain how this works:
Example 1: Standard Late Fee Calculation Suppose Mr. Sharma deducts a TDS of ₹50,000 on a property purchase in April 2026. The due date to file the TDS statement (such as Form No. 141) is May 30th. He forgets and finally files it on June 9th.
- Delay: 10 days.
- Daily Fee Calculation: 10 days × ₹200 = ₹2,000.
- Maximum Cap Check: The calculated fee (₹2,000) is well below the actual TDS amount (₹50,000).
- Final Late Fee: Mr. Sharma must pay a late fee of ₹2,000 before he is allowed to successfully file his delayed statement.
Example 2: Applying the Maximum Cap Suppose Ms. Gupta deducts a much smaller TDS amount of ₹1,500 for a transaction. Her due date to file the statement is also May 30th, but she delays filing it until June 19th.
- Delay: 20 days.
- Daily Fee Calculation: 20 days × ₹200 = ₹4,000.
- Maximum Cap Check: The calculated fee (₹4,000) exceeds the actual amount of tax she deducted (₹1,500). The law caps the penalty at the TDS amount.
- Final Late Fee: Ms. Gupta will not pay ₹4,000. Instead, her late fee is capped at ₹1,500. She must pay this capped amount before she can file the statement.
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