Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Return of Companies

Filing of Return of Income by Companies under Income-tax Act, 2025

Updated 11 October 2026 · Fact-checked

A company must furnish its return of income under section 263 by the due date, whatever its income or loss. A company return is verified under section 265, normally by the managing director. Late filing or missing audit reports attracts a fee under section 428. You must apply these provisions to the facts given.

Understand Filing of Return of Income by Companies

Every company is a taxable person. The Act expects it to file a return of income under section 263, and this duty applies to a company whether it earns profit, makes a loss or has no income. Your answer should state the filing duty first, because it is the base rule.

A return has three parts of compliance: it must be furnished in time, it must be properly verified by the right person, and it must be backed by the required audit reports. Each part has its own rule in the Act and its own consequence of default.

The rules on who verifies are in section 265. For a company that is not covered by a special case, the managing director verifies. If there is no managing director, or he cannot verify for an unavoidable reason, any director or another prescribed person can verify. Special cases are carved out: a non-resident company, a company in liquidation, a company under government management and a company in corporate insolvency resolution each have a different verifier.

The consequence of default is a fee under section 428. Late filing costs ₹1,000 if total income does not exceed ₹5,00,000 and ₹5,000 in any other case. A company will normally fall in the second slab unless its income is small. Failure to get accounts audited under section 63 or to furnish an accountant's report under section 172 carries heavier fees.

This page covers the topic from the angle of what the Act says in the supplied text. For the exact due dates, the time limits for belated and revised returns, and the forms and electronic modes, check the current Act text and rules, since those details are not reproduced here. In the exam, always link the provision, the facts and the conclusion.

Key rules to remember

Duty to file: Company required to furnish return under section 263 must do so by the due date in section 263(1); Applies to a company as a person required to file. State the section in your answer.
Fee for late return (section 428(a)): Total income ≤ ₹5,00,000: ₹1,000; any other case: ₹5,000; Applies where the return is not furnished by the due date. Test the income against ₹5,00,000.
Fee for return beyond nine months (section 428(b)): Return under section 263(5) furnished beyond nine months from end of tax year: ₹1,000 if total income ≤ ₹5,00,000; otherwise ₹5,000; Read together with the clause on the due date. Do not state a cumulative amount unless the facts support it.
Fee for missing tax audit (section 428(c)): Up to one month of continuing failure: ₹75,000; thereafter: ₹1,50,000; Failure to get accounts audited and furnish the report under section 63.
Fee for missing accountant's report (section 428(d)): Up to one month: ₹50,000; thereafter: ₹1,00,000; Report required under section 172.
Verification of company return (section 265, serial 3): Managing director; if none or unable for unavoidable reason: any director or other prescribed person; General company case, excluding serials 4 to 7.
Special verifiers for companies: Non-resident: power of attorney holder; being wound up or receiver appointed: liquidator; management taken over by government: principal officer; CIRP admitted: insolvency professional; Serials 4, 5, 6 and 7 of the section 265 table.

How to solve Filing of Return of Income by Companies questions

Use the provision, facts, conclusion pattern. Take each compliance point in turn.

1Identify the company's status: ordinary, non-resident, in liquidation, under government management or in CIRP.
2State that a return under section 263 is required and note the due date given or implied in the facts.
3Compare the actual filing date with the due date and with the nine-month limit in section 428(b).
4Test total income against ₹5,00,000 to pick the fee of ₹1,000 or ₹5,000 under section 428.
5Check whether audit under section 63 or an accountant's report under section 172 applied, and if it was furnished, and for how long it was delayed.
6Pick the correct verifier from section 265 using the company's status.
7Add the fees for each default separately and state the total.
8Write a one-line conclusion and, if asked, the practical compliance step.

Quickest way: Four-check scan for company return questions

When to use it: When time is short and the question lists many dates and persons.

Status: decides the verifier.
Timing: late, or beyond nine months.
Income: above or not above ₹5,00,000.
Reports: section 63 or section 172 report missing, and delay up to or over one month.
Add the fees and write the conclusion.

Common mistakes in Filing of Return of Income by Companies

Saying a loss-making company need not file a return.
Students link filing with tax payable.
Fix: State that the duty under section 263 applies to companies as required persons, and do not link it to profit.
Choosing the ₹1,000 fee for a company by default.
Students recall the lower slab from individual cases.
Fix: Always test total income against ₹5,00,000. Apply ₹1,000 only if it does not exceed that figure.
Naming any director as verifier in every case.
Section 265 has many rows and students blend them.
Fix: First choose the row by status. In the general case the managing director comes first and a director only in the fallback.
Mixing up the fees of section 63 and section 172 defaults.
The slabs look alike.
Fix: Remember ₹75,000 and ₹1,50,000 for section 63; ₹50,000 and ₹1,00,000 for section 172.
Quoting due dates and time limits from memory without checking the text.
Older Act dates are confused with the 2025 Act.
Fix: Cite the section and give dates only when the question supplies them or you are sure of them in the Income-tax Act, 2025.

Worked examples

Example 1

Meghdoot Pvt Ltd, a resident company with a managing director, has total income of ₹18,00,000. It furnishes its return after the due date under section 263(1) but within nine months from the end of the tax year. Its accounts were audited and the report filed in time. State the fee payable and who verifies the return.

Show the solution

Meghdoot is required to furnish a return under section 263, and it missed the due date, so section 428(a) applies.
Total income of ₹18,00,000 exceeds ₹5,00,000, so the fee is ₹5,000 under section 428(a)(ii).
The return was furnished within nine months, so section 428(b) is not triggered.
Audit report was filed in time, so section 428(c) does not apply.
Verification: the company is resident and not in a special case, so serial 3 of section 265 applies and the managing director verifies.

Answer: Fee of ₹5,000 under section 428(a)(ii); the managing director verifies the return under section 265.

Example 2

Kaveri Textiles Ltd, a resident company, had total income of ₹40,00,000. It is required to get its accounts audited under section 63, but the report was furnished 45 days late. Its return was also furnished after the due date but within nine months. Compute the total fee under section 428.

Show the solution

Late return: income exceeds ₹5,00,000, so ₹5,000 under section 428(a)(ii).
Return was within nine months, so no separate fee under section 428(b).
Audit report delay of 45 days is beyond one month, so the fee under section 428(c)(ii) is ₹1,50,000.
Total = ₹5,000 + ₹1,50,000 = ₹1,55,000.

Answer: Total fee under section 428 is ₹1,55,000.

Exam tips

Write the section number with every fee: 428(a), 428(b), 428(c), 428(d).
Always run the ₹5,00,000 test before writing the late return fee.
Identify the company's status first, because it decides the verifier under section 265.
Treat each default separately and add the fees at the end.
If the question gives dates, use them. If it does not, state the rule without inventing a date.

Practice questions from Computation of Total Income, Tax Liability and Filing of Return of Companies

Filing of Return of Income by Companies in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Filing of Return of Income by Companies: frequently asked questions

Must a company with a loss file a return?

Yes. A company required to furnish a return under section 263 must do so whether it has profit or loss. The duty is not tied to tax payable.

Who verifies the return of a company?

In the general case, the managing director verifies it under section 265. If there is no managing director or he cannot verify for an unavoidable reason, any director or another prescribed person can do so. Special cases such as non-resident companies and companies in liquidation have different verifiers.

What is the fee for filing a company return late?

Under section 428(a), the fee is ₹1,000 if total income does not exceed ₹5,00,000 and ₹5,000 in any other case. Most companies fall in the ₹5,000 slab.

What if the audit report is not filed?

Section 428(c) imposes ₹75,000 for a delay up to one month and ₹1,50,000 thereafter. A missing accountant's report under section 172 attracts ₹50,000 and then ₹1,00,000 under section 428(d).