Section 428, Income-tax Act 2025: Fee for default in furnishing return of income

How much is the late-filing fee?

Two numbers, split at ₹5 lakh of total income. File your return after the due date and the fee is ₹5,000. If your total income for the year is ₹5,00,000 or less, it is capped at ₹1,000. If you were never required to file at all, there is no fee. That is clause (a) of Section 428, the late-filing fee; the section carries three further fees for other defaults, covered below. Under the old law this was the whole of Section 234F.

The tier is decided by your total income, the figure after deductions on which you are assessed, not by the tax you owe. This catches people out under the new regime: the rebate now zeroes tax up to ₹12,00,000 of income, so someone earning ₹9,00,000 can owe nothing in tax and still pay the full ₹5,000 for filing late, because ₹9,00,000 sits above the ₹5 lakh line.

Section number and clause structure cross-checked against published copies of the enacted Act.†

When is the fee nil?

The fee bites only on a person who was required to file and filed late. If you had no filing obligation, a late return, or no return at all, costs you nothing under Section 428. So the real question is whether you had to file in the first place.

You must file once your total income before deductions crosses the basic exemption limit: ₹4,00,000 on the new regime for tax year 2026-27, ₹2,50,000 on the old regime for someone under 60. The test runs on income before the Chapter VIII deductions (the investment basket now in Section 123 and its siblings). This is the trap: if your gross income is ₹6,20,000 and deductions pull your taxable income under the exemption, you were still required to file, and a late return still costs you, capped at ₹1,000 because your assessed total income sits under ₹5 lakh.

You are also required to file, whatever your income, when you:

• Hold any asset or signing authority outside India, or are the beneficiary of a foreign asset.
• Cross the high-value markers that force a return: broadly, large current-account deposits, foreign-travel spend or electricity bills above the notified limits.
• Need to carry a loss forward, which means filing on time even when no other rule compels it.

Filing only to claim a refund, with income below the limit and no other trigger, is voluntary: no filing obligation means no fee. The placement of the deduction basket (old Section 80C) in Section 123 is cross-checked against published copies of the enacted Act.†

Section 234F became Section 428: what the 2025 Act changed

The money did not move; the label did. Section 234F of the 1961 Act becomes Section 428 of the Income-tax Act 2025, effective for tax year 2026-27 and the returns filed from 2027. The two fee figures, ₹5,000 and the ₹1,000 cap for small incomes, carry over untouched.

The late-filing fee is now clause (a) of Section 428, which holds both figures: ₹1,000 for total income up to ₹5 lakh, ₹5,000 above it. The reference updates too: the fee attaches to a failure to file under Section 263, the 2025 Act's home for the return of income that used to be Section 139.

One practical point is unchanged and worth stating plainly. The fee is mandatory. It is a fee, not a penalty, so there is no reasonable-cause defence and the assessing officer has no power to waive or reduce it. The only way the late-filing fee comes to nil is by not having been required to file.

Section 428 is wider than the old 234F. As substituted by the Finance Act 2026, three more late fees now sit in the same section, for defaults beyond a late income-tax return:

• Clause (b), a late revised return. Section 263 now allows a revised return up to twelve months from the end of the tax year (31 March 2028 for tax year 2026-27), a window widened from nine months, but one filed beyond nine months costs ₹1,000 where total income is ₹5 lakh or less, ₹5,000 otherwise.
• Clause (c), a late tax-audit report: ₹75,000 when it is up to one month late, ₹1,50,000 after that.
• Clause (d), a late transfer-pricing accountant's report: ₹50,000 up to one month, ₹1,00,000 after that.

Section 428 as substituted by the Finance Act 2026, its four clauses and the Section 263 reference cross-checked against published copies of the enacted Act.†

The fee is only part of the bill: interest under Section 423

A flat fee is the floor, not the ceiling, of what going late costs. If any tax was still unpaid at the due date, it also carries simple interest at 1% for every month, or part of a month, that the return runs late. This is the interest of the old Section 234A, now Section 423, and it is separate from and additional to the Section 428 fee.

The base is your tax on total income after subtracting what has already been paid: TDS, TCS, advance tax and any self-assessment tax paid before you file. If your tax was fully covered by TDS, this interest is nil however late you are, and the fee is all you owe. If ₹2,00,000 was still unpaid and you file four part-months late, the interest is 1% × 4 × ₹2,00,000, which is ₹8,000, on top of the flat fee.

Two further interest charges can stack on the same late return: Section 424 (old 234B) and Section 425 (old 234C), for shortfalls and deferment in advance tax. They are triggered by underpaying tax through the year, not by filing late, but a taxpayer who left tax unpaid usually meets all three at once.

Interest section numbers (423, 424, 425) cross-checked against published copies of the enacted Act.†

Late filing forfeits your loss carry-forward

For anyone carrying a loss, this is usually the expensive part, and it dwarfs the fee. To carry a loss forward to future years you must file the return by the due date. Miss it, and the right is gone for good: a belated return, however soon after, cannot revive it.

The losses you lose are business losses (including speculation and specified-business losses) and capital losses, both short-term and long-term. Two survive a late return: the loss from a house property, and unabsorbed depreciation. Both carry forward whether or not you filed on time.

Put a number on it. A trader with ₹8,00,000 of other income and a ₹6,00,000 short-term capital loss files one day late. The fee is ₹5,000. But the ₹6,00,000 loss can no longer be carried forward, so next year's ₹6,00,000 short-term gain, taxed at 20% under Section 196, is no longer sheltered. That is ₹1,20,000 of tax the late return quietly cost, twenty-four times the fee itself.

The carry-forward condition sits in the return-of-income section (263) and its treatment of a return of loss, cross-checked against published copies of the enacted Act.†

A belated return can hold you to the new regime

The regime choice has a deadline of its own, and it is the same due date. The new regime is the default. To be taxed under the old regime instead, you must exercise the option by the due date for filing, and anyone with business or professional income does it by filing Form 10-IEA on time. File the return late and, for that year, the option is treated as lost: you are assessed under the new regime whether or not it suits you.

For a salaried taxpayer weighing only the two regimes, this can be the difference between claiming a full stack of house-loan interest and 80C-style deductions and claiming none of it. If the old regime is your better answer, the due date is not a soft target.

The option to leave the default new regime must be exercised by the due date, and a belated return does not carry it. Cross-checked against published copies of the enacted Act and the Form 10-IEA rules.†

How the fee is actually paid

You pay it yourself, as you file. The fee is not a bill that arrives later; it is computed inside the return and paid like self-assessment tax, through the tax-payment portal under the head for fee. The filing utility will not let a belated return be submitted until the fee, along with any tax and interest due, is paid and the challan entered.

So the sequence is simple: work out the fee tier from your total income, add any Section 423 interest on unpaid tax, pay the total, then upload. There is no separate demand and no waiver counter to visit. Getting the figure right before you file is the whole job.

How late can you file, and what happens after that?

You have until the belated deadline, then the ordinary door closes. A belated return can be filed up to nine months from the end of the tax year, which is 31 December of the following year, or before your assessment is completed, whichever comes first. For tax year 2026-27 that is 31 December 2027. The Section 428 fee applies to the whole of this window: being one day late and five months late cost the same flat figure.

If you have already filed, on time or belated, and later need to correct the return, you have longer than the belated deadline. A revised return can be filed up to twelve months from the end of the tax year, a window the Finance Act 2026 widened from nine months, which for tax year 2026-27 runs to 31 March 2028. A revision filed after the nine-month mark carries its own fee under clause (b) of Section 428: ₹1,000 where total income is ₹5 lakh or less, ₹5,000 otherwise.

Miss 31 December without having filed at all and the ordinary return closes for good. What remains then is an updated return, which reopens filing for several more years but only on payment of additional tax on the shortfall, over and above the fee and interest. It is a repair mechanism, not a cheaper late-filing route.

One quieter cost sits inside this window: refund interest. When you are due a refund, the interest the department pays on it runs only from the date you actually file a late return, not from the start of the assessment period. File in December instead of July and you simply hand back several months of that interest.

The belated-return window (nine months from the end of the tax year), the revised-return window (twelve months, widened by the Finance Act 2026) and the updated-return route are set by the return-of-income section (263), cross-checked against published copies of the enacted Act.†

What to do if your return will be late

The one figure to carry away: for most people the late-filing fee is ₹5,000, but the carry-forward you forfeit or the interest you let run can be many times that. The fee is rarely the real cost of filing late.

The fee is fixed, but almost everything else about going late is inside your control:

• Pay your tax by the due date even if the return itself slips. The ₹5,000 fee will not grow, but the Section 423 interest will: at 1% a month, ₹2,00,000 of unpaid tax adds ₹2,000 for every month you run past the due date. Pay the tax on time and file the paperwork a few weeks late, and the fee is all it costs.
• If you have a loss to carry forward, treat the due date as the real deadline, not 31 December. A ₹6,00,000 capital loss set against next year's 20% gains is worth ₹1,20,000, and no belated return recovers it. The same holds for anyone with business income who wants the old regime.
• If your income is genuinely below the filing limit and no other rule forces you to file, you owe no fee at any point. Confirm that before you assume a penalty applies, and check the gross-income test, because deductions do not remove the duty to file.
• If you have already blown past 31 July, still file inside the belated window rather than waiting. The fee is the same, but every extra month of unpaid tax is another 1% of interest, and a refund you are owed only starts earning interest from the day you file.

Worked examples

Section 428 FAQs

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