Filing Income Tax Return Late – Fee under Section 428 and Interest under Sections 423 to 425
- Late fee under section 428 is ₹1,000 if total income is up to ₹5,00,000 and ₹5,000 otherwise.
- Interest on unpaid tax for late filing is 1% per month under section 423; section 424 charges 1% a month if advance tax is below 90% of assessed tax.
- Return processing can disallow a loss claimed in a late return, so file on time even if no tax is payable.
If you miss the due date under section 263(1), three different costs can arise: a late fee, interest on tax that remained unpaid, and the loss of some benefits. The sections below replace the old sections 234F, 234A, 234B and 234C.
Late fee – section 428
| Total income | Fee |
|---|---|
| Up to ₹5,00,000 | ₹1,000 |
| More than ₹5,00,000 | ₹5,000 |
The fee also applies if you file a return after nine months from the end of the tax year, under section 263(5). See our guide on due dates and belated returns. Separately, failing to get accounts audited and furnish the report under section 63 attracts a fee starting at ₹75,000 (section 428(c)).
Interest for late filing – section 423
If the return is late or not filed, you pay simple interest at 1% per month on the tax that remained unpaid (I = 1% × A × T in section 423(1)). The starting and ending dates and the tax amount are set out in the table in section 423(2). As an illustration only: unpaid tax of ₹20,000 for a delay of 2 months gives 1% × ₹20,000 × 2 = ₹400.
Interest on advance tax – sections 424 and 425
- Section 424: if you were liable to pay advance tax but paid none, or paid less than 90% of the assessed tax, simple interest at 1% per month applies from 1 April following the tax year, on the unpaid amount.
- Section 425: if an instalment paid by its due date is less than what was due on the returned income, interest is charged on the shortfall according to the table in that section. See also advance tax due dates.
Most salaried employees whose tax is fully deducted as TDS do not have to pay advance tax, because advance tax is payable only when the tax payable (after TDS) is ₹10,000 or more (section 404).
Other consequences of filing late
- You must pay all tax, interest and fee before filing the return and attach proof of payment (section 266).
- While processing a return, the department can disallow a loss claimed where the return for the loss year was filed after the due date (section 270(1)(a)(iv)).
- Wilful failure to file can lead to prosecution under section 479 in serious cases (tax evaded above ₹10 lakh), but most late filers face only the fee and interest.
Refund interest
If a refund is due, you get simple interest at 0.5% per month under section 437, with the period depending on whether you filed on time. File before the due date to avoid losing that benefit.
Still have a question? Ask TAXBADI – get an answer from the Act, Rules and forms, with the exact sections cited.
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This guide is for general information and is not tax advice. Tax figures are before health and education cess unless stated. The law and the official notifications are the final authority – see our Disclaimer. Found a mistake? Tell us.