Chapter XIX - Collection and Recovery of Tax
Section 427
Section 427: fee for default in furnishing statements
Section 427 levies a daily late fee - separate from any penalty - on two kinds of statement defaults: failing to deliver a TDS/TCS statement under Section 397(3)(b), and failing to furnish a statement of financial transaction or reportable account under Section 508.
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Need advice on Section 427?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Without prejudice to the provisions of this Act, where any person fails to deliver or cause to be delivered a statement as per section 397(3)(b) within the time prescribed therein, he shall be liable to pay by way of fee, a sum of ₹200 for every day for which such failure continues.
(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).
(3) Without prejudice to the provisions of this Act, where any person who is required to furnish a statement of financial transaction or reportable account under section 508(1), fails to furnish such statement within the time prescribed under section 508(2), he shall be liable to pay by way of fee, a sum of ₹200 for every day for which such failure continues and such fee shall not exceed a sum of ₹1,00,000.
Introduction
The Finance Act, 2026 substituted section 427 to include two daily-fee defaults: late TDS/TCS statements under section 397(3)(b), and late statements of financial transaction or reportable account under section 508. Both use ₹200 per day, with different ceilings.
Key takeaways
TDS/TCS fee
The ₹200 daily fee cannot exceed the tax deductible or collectible and is paid before the statement is delivered.
Financial-transaction statement fee
The ₹200 daily fee for a section 508 statement is capped at ₹1,00,000.
Separate from penalty
A late-filing fee under this section is distinct from any applicable penalty provision.
Fee for late TDS/TCS statement - Section 427(1) and (2)
"Without prejudice to the provisions of this Act, where any person fails to deliver or cause to be delivered a statement as per section 397(3)(b) within the time prescribed therein, he shall be liable to pay by way of fee, a sum of ₹200 for every day for which such failure continues."
The amount of this fee must not exceed the amount of tax deductible or collectible, and must be paid before delivering (or causing to be delivered) the statement.
| Parameter | Detail |
|---|---|
| Fee rate | ₹200 for every day the failure continues |
| Cap | Not to exceed the amount of tax deductible or collectible |
| When payable | Before delivering (or causing to be delivered) the statement |
Fee for late statement of financial transaction or reportable account - Section 427(3)
"Without prejudice to the provisions of this Act, where any person who is required to furnish a statement of financial transaction or reportable account under section 508(1), fails to furnish such statement within the time prescribed under section 508(2), he shall be liable to pay by way of fee, a sum of ₹200 for every day for which such failure continues and such fee shall not exceed a sum of ₹1,00,000."
| Parameter | Detail |
|---|---|
| Fee rate | ₹200 for every day the failure continues |
| Cap | ₹1,00,000 |
Applying Section 427 in practice
Separate defaults. Section 427 addresses late TDS/TCS statements under section 397(3)(b) and late statements of financial transaction or reportable account under section 508. Each has its own subsection, rate and cap. A filing that was timely but inaccurate is a different issue from a late filing; fees and penalties should not be conflated.
Hypothetical example
A deductor remits tax on time but files the required statement late; timely remittance alone does not decide the section 427 filing-fee question.
Step-by-step flow for the fee under Section 427
- 1
Was the statement delivered or furnished after the time prescribed?
- No: No fee arises under Section 427.
- Yes: Go to the next step.
- 2
Which statement is late?
- Statement under Section 397(3)(b): Go to the next step.
- Statement of financial transaction or reportable account under Section 508(1): Go to step 5.
- 3
Fee for the Section 397(3)(b) statement
₹200 for every day the failure continues (Section 427(1)). The fee cannot exceed the amount of tax deductible or collectible (Section 427(2)(a)).
- 4
When is it paid?
The fee must be paid before the statement is delivered (Section 427(2)(b)).
- Fee paid and statement delivered: The Section 397(3)(b) case ends here.
- 5
Fee for the Section 508(1) statement
₹200 for every day the failure continues, not exceeding ₹1,00,000 (Section 427(3)). The fee applies without prejudice to the other provisions of the Act.
Practical checklist
Do
- Record the prescribed filing date, actual delivery date and statement type.
- Apply the correct ceiling for the TDS/TCS or section 508 limb.
- identify the exact statement type and statutory due date, actual delivery date, days of default, fee cap and any correction filing.
Avoid
- Do not apply the ₹1,00,000 section 508 cap to the separate TDS/TCS fee calculation.
Illustrative example
Worked example: two late statements
Hypothetical facts (illustration only, not a real taxpayer): A company files a statement under Section 397(3)(b) 45 days after the prescribed time. The tax deductible covered by that statement is an assumed ₹6,000. Separately, it furnishes a statement of financial transaction under Section 508(1) 600 days after the prescribed time.
First statement: daily fee
45 days × ₹200 = ₹9,000.
First statement: cap
The fee cannot exceed the tax deductible of ₹6,000, so the fee is ₹6,000. It must be paid before the statement is delivered.
Second statement: daily fee
600 days × ₹200 = ₹1,20,000.
Second statement: cap
The cap under Section 427(3) is ₹1,00,000, so the fee is ₹1,00,000.
Outcome
- Total fee: ₹6,000 + ₹1,00,000 = ₹1,06,000.
- The prescribed time limits come from Sections 397 and 508 and the rules, not from Section 427.
Frequently asked questions
What is the fee for a late TDS/TCS statement under Section 427?
₹200 for every day the failure continues, capped at the amount of tax deductible or collectible, and it must be paid before the statement is delivered.
What is the fee for a late statement of financial transaction under Section 427?
₹200 for every day the failure continues, capped at ₹1,00,000, for a statement of financial transaction or reportable account required under Section 508(1) that is not furnished within the time prescribed under Section 508(2).
Is this called a penalty?
Section 427 calls it a fee; other penalty provisions must be tested separately.
Need help applying this provision to your situation?
Calculate your late fee for TDS/TCS or SFT statement delayLast updated 10 October 2026