Section 428 of the Income-tax Act, 2025 — Fee for Default in Furnishing Return of Income, Audited Accounts and Reports

In plain language

What Section 428 is about

Section 428 of the Income-tax Act, 2025 is the provision that charges you a fee if you file your Income Tax Return (ITR) after the due date, and — as re-organised under the Finance Act, 2026 — it also gathers together the charges for failing to get your accounts audited or to furnish required audit reports on time. It is the direct successor to the well-known Section 234F of the Income-tax Act, 1961 (late-filing fee), and it aligns the earlier audit-report penalties (old Section 271B) into a consolidated "fee" framework. The provision takes effect from 1 April 2026 and applies to returns for tax year 2026-27 onwards.

• Core rule: If a person required to furnish a return of income under Section 263 fails to do so within the time prescribed, a fee becomes payable.
• It is a "fee", not a "penalty": This is important. Unlike a penalty, this fee is automatic, requires no separate order, and cannot be waived for "reasonable cause" in the way old penalties could be argued down.

The late-filing fee amounts (successor to Section 234F)

The amounts are unchanged from the 1961 Act and depend on your total income:

• ₹1,000 if your total income does not exceed ₹5,00,000.
• ₹5,000 in any other case (total income above ₹5 lakh).

The old 234F distinction between filing before and after 31 December (which used to push the fee to ₹10,000) has effectively been rationalised, since the belated-return window itself now generally closes earlier. Always confirm the exact filing deadline for the year through the Income Tax portal.

Who it applies to

• Anyone required to file a return under Section 263 who files late — salaried individuals, pensioners, freelancers, businesses, companies, firms and trusts.
• If your total income is below the basic exemption limit and you were not otherwise required to file, no late-filing fee applies. But be careful: many people are required to file even below the exemption limit (for example, high-value deposits, foreign assets, or large expenditure).
• For the audit-report portion, it applies to taxpayers whose turnover or gross receipts cross the tax-audit thresholds and who therefore must get accounts audited and furnish the report.

The audit-accounts / audit-report component (successor to Section 271B)

Section 428, as restructured, also covers the failure to get accounts audited and to furnish the audit report by the due date. Under the earlier Section 271B the charge was the lower of 0.5% of turnover/gross receipts or ₹1,50,000. The 2026 restructuring re-labels this consequence as a fee within this consolidated section. Because the exact drafting of the audit-report clauses is being finalised through Finance Act, 2026 amendments, treat the 0.5% of turnover, capped at ₹1,50,000 figure as the working benchmark and verify against the notified text before relying on it.

How it interacts with other sections

• Section 263 (return of income): defines who must file and by when; Section 428 is the charge for missing that deadline.
• Section 423 (interest for defaults in furnishing return): this is the successor to Section 234A. It runs in addition to the Section 428 fee — you can pay both interest and fee for the same late return.
• Tax-audit sections: the audit-report fee bites only where audit was mandatory.

Practical implications

• You must pay the fee before filing. The portal will not let you submit a belated return until the Section 428 fee is paid as self-assessment tax.
• Losses cannot be carried forward if you file late (except house-property loss and unabsorbed depreciation) — often a far bigger cost than the fee itself.
• No reasonable-cause defence for the late-filing fee — it is mechanical. File on time to avoid it entirely.