F.—LEVY OF FEE IN CERTAIN CASES

Fee for default in furnishing statements.

427(1)

Without prejudice to the provisions of this Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in section 393(3)(b), he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.

427(2)

The amount of fee referred to in sub-section (1) shall,––

• (a) not exceed the amount of tax deductible or collectible; and
• (b) be paid before delivering or causing to be delivered the statement, as per sub-section (1).

Explanation

Section Summary:

Section 427 of the Income Tax Act imposes a fee on individuals or entities who fail to furnish certain statements within the prescribed time limit under Section 393(3)(b). The purpose of this section is to ensure timely compliance with reporting requirements related to tax deductions or collections.

Key Changes:

1. Introduction of Daily Fee: A new fee of ₹200 per day is introduced for delays in submitting the required statements. This is a specific penalty mechanism distinct from other penalties under the Act.
2. Cap on Fee: The total fee cannot exceed the amount of tax that was deductible or collectible.
3. Precondition for Submission: The fee must be paid before the delayed statement is submitted.

Practical Implications:

• For Taxpayers/Businesses: Entities responsible for deducting or collecting tax (e.g., employers, businesses) must ensure timely submission of statements to avoid accumulating fees. The daily fee can add up quickly, especially for prolonged delays.
• For Compliance Processes: Taxpayers must prioritize timely filing and ensure that any delays are rectified promptly to minimize financial penalties.

Critical Concepts:

• Fee vs. Penalty: The ₹200 per day charge is termed a "fee," not a penalty, which means it is a fixed amount for non-compliance rather than a percentage-based penalty.
• Interaction with Other Provisions: This fee is in addition to any other penalties or consequences under the Income Tax Act for non-compliance.

Compliance Steps:

1. Identify Reporting Deadlines: Be aware of the deadlines for submitting statements under Section 393(3)(b).
2. File Statements on Time: Ensure timely submission to avoid the fee.
3. Pay Fee Before Filing: If there is a delay, calculate the fee (₹200 per day, capped at the deductible/collectible tax amount) and pay it before submitting the statement.

Example:

• A business fails to submit a TDS (Tax Deducted at Source) statement for 15 days beyond the due date. The fee would be ₹200 × 15 = ₹3,000, provided this amount does not exceed the total TDS amount. The business must pay ₹3,000 before submitting the delayed statement.

This section emphasizes the importance of timely compliance and introduces a straightforward fee structure to deter delays in reporting.