Sections 426 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Four provisions of Chapter XIX deal with money the assessee owes because of a procedural lapse. Section 426 charges interest where a refund granted on processing turns out to be too high. Section 427 imposes a fee of Rs. 200 a day for late TDS or TCS statements and for late statements of financial transaction or reportable account. Section 429 imposes a similar daily fee on research associations, universities and funds, and section 430 sets a ceiling on the fee for failing to intimate an Aadhaar number. This article follows the text as per the Income-tax Act, 2025 as amended by the Finance Act, 2026. For help with statements and corrections, see our TDS return filing service.
Interest on an excess refund runs at 0.5% for every month or part of a month from the date of the refund to the date of regular assessment (section 426). Section 427, as substituted by the Finance Act, 2026, charges Rs. 200 for every day of delay in delivering a TDS or TCS statement, capped at the tax deductible or collectible, and the same daily rate for a statement of financial transaction, capped at Rs. 1,00,000. Section 429 is a Rs. 200-a-day fee for certain institutions and funds, and section 430 caps the Aadhaar intimation fee at Rs. 1,000.
Section 426: interest on excess refund
Subject to the other provisions of the Act, where a refund is granted to the assessee under section 270(1), and:
- (a) no refund is due on regular assessment; or
- (b) the amount refunded under section 270(1) exceeds the amount refundable on regular assessment,
the assessee is liable to pay simple interest at the rate of 0.5% on the whole or the excess amount refunded, for every month or part of a month in the period from the date of grant of the refund to the date of the regular assessment.
| Sub-section | Rule |
|---|---|
| (1) | Interest at 0.5% per month or part of a month on the whole or the excess refund, from the date of grant to the date of regular assessment |
| (2) | Where, as a result of an order under section 287, 288, 359, 363, 365(10), 368, 377 or 378, the refund under section 270(1) is held to be correctly allowed in whole or in part, the interest is reduced accordingly |
| (3) | An assessment made for the first time under section 279 for a tax year is regarded as a regular assessment for this section |
Example (amounts assumed). Processing under section 270(1) grants Ritu a refund of Rs. 40,000. Regular assessment later shows that only Rs. 25,000 was refundable, so the excess is Rs. 15,000. The assessment is made four months and ten days after the refund was granted, which is five months or part of a month. Interest = 0.5% x Rs. 15,000 x 5 = Rs. 375. If an appeal order then holds Rs. 10,000 of the refund to be correctly allowed, the interest is reduced accordingly, to 0.5% x Rs. 5,000 x 5 = Rs. 125. For the assessment stage see our post on section 270.
Section 427: fee for default in furnishing statements
Section 427 was substituted by the Finance Act, 2026, with effect from 1 April 2026 (section 96 of that Act). As it now stands:
| Sub-section | Who | Default | Fee |
|---|---|---|---|
| (1) | Any person | Fails to deliver or cause to be delivered a statement as per section 397(3)(b) within the time prescribed therein | Rs. 200 for every day for which the failure continues |
| (2) | Fee in sub-section (1) | (a) shall not exceed the amount of tax deductible or collectible; (b) shall be paid before delivering the statement | |
| (3) | A person required to furnish a statement of financial transaction or reportable account under section 508(1) | Fails to furnish it within the time prescribed under section 508(2) | Rs. 200 for every day for which the failure continues, not exceeding Rs. 1,00,000 |
Both fees apply "without prejudice to the provisions of this Act", which means other consequences are not displaced. Time limits for the statements are "as prescribed"; the detail is left to the Income-tax Rules, 2026 (see our rule-wise guides). The statements under section 397(3)(b) are explained in our article on section 397, and the processing that computes the fee is covered in the article on sections 396, 399, 400 and 401.
Example (amounts assumed). Sunrise Foods Pvt Ltd should have delivered a TDS statement by the prescribed time. It delivers the statement 45 days late. The tax deductible shown in the statement is Rs. 6,000. Fee at Rs. 200 x 45 days = Rs. 9,000, but sub-section (2)(a) caps it at the tax deductible, Rs. 6,000. Sunrise Foods must pay Rs. 6,000 before delivering the statement.
Example (amounts assumed). A reporting entity is 600 days late with a statement under section 508(1). Rs. 200 x 600 = Rs. 1,20,000, but sub-section (3) limits the fee to Rs. 1,00,000.
Note that the cap in sub-section (2)(a) is by reference to tax deductible or collectible, while the cap in sub-section (3) is a fixed sum. Sub-section (3) has no cap by reference to any tax.
Section 429: fee for default relating to a statement or certificate
Without prejudice to the Act, a fee of Rs. 200 for every day during which the failure continues applies where:
| Clause | Who | Failure |
|---|---|---|
| (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 the documents prescribed under section 45(4)(a) within the prescribed time, or to furnish a certificate prescribed under section 45(4)(a) |
| (b) | The institution or fund | Fails to deliver a statement under section 354(1)(e) within the time prescribed under that section, or to furnish a certificate prescribed under section 354(1)(g) |
Sub-section (2): the fee (a) shall not exceed the amount in respect of which the failure has occurred; and (b) shall be paid before delivering the statement or furnishing the certificate. Which documents and certificates are prescribed, and the time, are left to the Income-tax Rules, 2026.
Example (amounts assumed). A research association fails to deliver the prescribed documents for 20 days. Fee = Rs. 200 x 20 = Rs. 4,000. The amount in respect of which the failure occurred was Rs. 3,000, so the fee is limited to Rs. 3,000 under sub-section (2)(a), and is paid before the documents are delivered.
Section 430: fee for default relating to intimation of Aadhaar number
Without prejudice to the Act, where a person is required to intimate his Aadhaar number under section 262(6) and fails to do so on or before such date as may be prescribed, he is liable to pay such fee as may be prescribed, not exceeding Rs. 1,000, at the time of making the intimation under that section after the said date.
Three points follow. The date and the amount of the fee are prescribed, not stated in the Act. Only the ceiling, Rs. 1,000, is in the Act. And the fee is paid "at the time of making intimation" after the date, so it is collected when the person makes the late intimation, not as a separate demand.
Comparing the four provisions
| Section | Trigger | Rate | Cap |
|---|---|---|---|
| 426 | Excess refund under section 270(1) | 0.5% per month or part of a month | None stated; runs to the regular assessment |
| 427(1), (2) | Late TDS or TCS statement | Rs. 200 a day | Tax deductible or collectible |
| 427(3) | Late statement of financial transaction or reportable account | Rs. 200 a day | Rs. 1,00,000 |
| 429 | Late documents, statement or certificate by listed institutions and funds | Rs. 200 a day | Amount in respect of which the failure occurred |
| 430 | Late Aadhaar intimation | As prescribed | Rs. 1,000 |
Interest provisions for the return and for advance tax are in sections 423 to 425; see our posts on section 425 and section 428. Section 428, on fees for the late return, accounts and reports, has its own post; this article does not repeat it.
Need help with TDS statements and late fees?
A late statement draws a daily fee that must be paid before the statement can be delivered. Our TDS return filing team prepares the statements on time, computes the fee where one is due and files correction statements.
Key takeaways
- Excess refund under section 270(1) carries interest at 0.5% for every month or part of a month until regular assessment.
- Section 427 was substituted by the Finance Act, 2026; the fee is Rs. 200 a day.
- The fee for a late TDS or TCS statement cannot exceed the tax deductible or collectible, and must be paid before the statement is delivered.
- The fee for a late statement of financial transaction cannot exceed Rs. 1,00,000.
- Section 429 applies the Rs. 200-a-day fee to listed institutions, with a cap at the amount in respect of which the failure occurred.
- The Aadhaar intimation fee is as prescribed, up to Rs. 1,000.
Read next
- Section 423: interest for default in furnishing return of income
- Section 397: compliance and reporting for TDS and TCS
- Section 425: interest for deferment of advance tax
- Section 428: late filing fee
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.