Section 74A: the unified demand provision from FY 2024-25

What changed

Earlier, Section 73 applied to non-fraud cases and Section 74 to cases involving fraud, wilful misstatement or suppression, each with different time limits. Section 74A brings both into one section with a common time limit, while keeping different penalties depending on whether fraud or suppression is involved.

• Show cause notice: within 42 months from the due date of the annual return for the year, or from the date of erroneous refund.
• Order: within 12 months from the date of the notice, extendable by up to six months by a senior officer.
• No notice is issued if the tax involved in a financial year is below Rs. 1,000.
• A statement for subsequent periods on the same grounds can be served in place of a fresh notice.

Penalty and early payment

Without fraud or suppression, the penalty is 10% of the tax or Rs. 10,000, whichever is higher, and no penalty applies if tax and interest are paid within 60 days of the notice. With fraud or suppression, the penalty equals the tax, reduced substantially if tax, interest and a lower penalty are paid before the notice, within 60 days of it, or within 60 days of the order.

Because the earliest notices under Section 74A are only now becoming due, expect the department to follow the DRC-01A intimation and DRC-01 notice format already used.

Get it handled for you

Received a notice like this? Our chartered accountants draft the reply from your records and an authorised representative follows up with the officer, so you do not have to visit the department. Call or WhatsApp +91 63677 44602, or use the form below.

This guide explains the law in general terms as of October 2026. Time limits and requirements can depend on the facts of your case and on the notice you received.