Fee for default relating to statement or certificate.

429(1)

Without prejudice to the provisions of this Act, where,—

• (a) the research association, University, college or other institution referred to in section 45(3)(a) or the company referred to in section 45(3)(b) fails to deliver or cause to be delivered the documents as prescribed in section 45(4)(a) within the time as prescribed therein or furnish a certificate as prescribed under section 45(4)(a); or
• (b) the institution or fund fails to deliver or cause to be delivered a statement within the time as prescribed under section 354(1)(e), or furnish a certificate as prescribed under section 354(1)(f), it shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.

429(2)

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

• (a) not exceed the amount in respect of which the failure referred to therein has occurred;
• (b) be paid before delivering or causing to be delivered the statement or before furnishing the certificate referred to in sub-section (1).

Explanation

Section Summary:

Section 429(1) and 429(2) of the new income tax law imposes a fee for delays or failures in submitting required documents or certificates by specific entities, such as research associations, universities, colleges, institutions, or companies. The fee applies if these entities fail to deliver statements or certificates within the prescribed time limits under sections 45(4)(a) or 354(1)(e) and (f). The fee is calculated at ₹200 per day for each day the failure continues, but it cannot exceed the amount related to the failure.

Key Changes:

• Introduction of Daily Fee: Previously, there may not have been a specific daily fee structure for delays in submitting documents or certificates under these sections. The new law introduces a clear penalty of ₹200 per day for non-compliance.
• Cap on Fee: The total fee cannot exceed the amount associated with the failure, ensuring proportionality in penalties.

Practical Implications:

• For Research Associations, Universities, and Institutions: These entities must ensure timely submission of documents or certificates to avoid accumulating daily fees. Delays could lead to significant financial penalties, especially if the failure continues for an extended period.
• For Companies: Companies falling under section 45(3)(b) must also comply with the prescribed timelines to avoid penalties.
• Compliance Burden: Entities must maintain robust internal processes to track deadlines and ensure timely submissions.

Critical Concepts:

• Section 45(4)(a): Refers to the requirement for research associations, universities, colleges, or institutions to deliver specific documents or certificates within a prescribed time.
• Section 354(1)(e) and (f): Pertains to the obligation of institutions or funds to deliver statements or furnish certificates within specified timelines.
• Fee Calculation: The fee is ₹200 per day, but the total fee cannot exceed the amount related to the failure. For example, if the failure relates to a ₹10,000 transaction, the maximum fee would be ₹10,000, even if the delay extends beyond 50 days.

Compliance Steps:

1. Identify Deadlines: Entities must be aware of the specific timelines for submitting documents or certificates under sections 45(4)(a) and 354(1)(e) and (f).
2. Monitor Submissions: Implement internal tracking systems to ensure timely delivery of required documents.
3. Pay Fee if Applicable: If a delay occurs, calculate the fee (₹200 per day) and ensure it is paid before submitting the delayed documents or certificates.
4. Avoid Exceeding Cap: Ensure the total fee does not exceed the amount related to the failure.

Examples:

• Scenario 1: A university fails to submit a required certificate under section 45(4)(a) for 30 days. The fee would be ₹200 x 30 = ₹6,000. If the amount related to the failure is ₹5,000, the fee is capped at ₹5,000.
• Scenario 2: A research association delays submitting a statement under section 354(1)(e) for 15 days. The fee would be ₹200 x 15 = ₹3,000, provided this does not exceed the amount related to the failure.

This section emphasizes the importance of timely compliance and introduces a structured penalty system to deter delays.