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Penalty Under Income Tax Act
Updated on: Jan 13th, 2022 - 3:41:50 AM
13 min read
An assessee who commits an offence under the provisions of The Income Tax Act, 1961 shall be subject to penalty. The penalty is an additional amount levied and is different from the tax payable. Penalty is levied based on the law at the time of the offence being committed and not as it stands in the financial year for which the assessment is being made. The list of penalties levied under the Income Tax Act, 1961 are:
| Sl No | Section No and Description | Penalty |
| 1) | Section 158BFA- Determination of undisclosed income for the block period, when a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of any person | Minimum-100% of the tax leviable in respect of the undisclosed income Maximum-300% of the tax leviable in respect of the undisclosed income. The above penalty shall be levied only on the income determined by the ITO in excess of the ITR furnished by the assessee u/s 158BC and appeal is not filed against such assessment. |
| 2) | Section 221(1)- Default in making payment of taxes | Amount as directed by the assessing officer. However, the amount of penalty cannot exceed the amount of tax in arrears. |
| 3) | Section 234E- Failure to file return in respect of TDS/TCS within the time prescribed as given under section 200(3)/206C(3) | Rs.200 for every day of default |
| 4) | Section 234F- Default in furnishing of return under section 139(1) within the time prescribed | Rs.5,000 if return is furnished before 31st December of the assessment year. Rs. 10,000 in any other case Note: if the income does not exceed Rs.5 Lakhs then the penalty shall not exceed Rs.1,000 |
| 5) | Section 270A-Penalty for under-reporting of income Penalty for under-reporting on account of misreporting of income | 50% of the amount of tax payable on under-reported income. 200% of the amount of tax payable on under-reported income |
| 6) | Section 271(1)(b)-Failure to furnish returns and comply with notices Note: Applicable up to AY 2016-17 | Rs.10,000 for every failure |
| 7) | Section 271(1)(c)-Concealment of the particulars of his income/fringe benefits or furnished inaccurate particulars of such income/fringe benefits Note: Applicable up to AY 2016-17 | Minimum:100% of tax sought to be evaded. Maximum: 300% of tax sought to be evaded |
| 8) | Section 271(1((4)- Distribution of profits by a registered firm not in accordance with the partnership deed and thereby partner returned his income below the real amount Note: Applicable up to AY 2016-17 | Maximum-150% of the tax avoided |
| 9) | Section 271A-Failure to keep, maintain or retain the books of account, documents as required under Section 44AA | Rs.25,000 |
| 10) | Section 271AA(1)-Penalty in respect of an international transaction/specified domestic transaction with regard to: -failure to keep and maintain any such information and document as required by Section 92D(1) or 92D(2) -failure to report such transaction which is required to be done -Maintaining or furnishing incorrect information or document | 2% of the value of each international transaction or specified domestic transaction entered into. |
| 11) | Section 271AA(2)- Failure to furnish information and document to the authority prescribed as required under Section 92D(4) | Rs.5,00,000 |
| 12) | Section 271AAA(1)- Where search has been initiated under Section 132 on between 1st day of June, 2007 and 1st day of July, 2012 | 10% of the undisclosed income of the specified previous year |
| Section 271AAA(2)- Nothing contained in sub-section (1) shall apply | if the assessee-admits the undisclosed income and specifies the manner in which such income has been derivedsubstantiates the manner in which the undisclosed income was derivedpays the tax, together with interest, if any, in respect of the undisclosed incomeNo penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be levied. | |
| 13) | Section 271AAB(1)-Where search has been initiated between 1st day of July 2012 and 15th Dec 2016 | a) At the rate of 10% of the undisclosed income if: -Assessee admits the undisclosed income along with the manner of deriving the same. -Substantiates the manner in which undisclosed income was derived -Pays the tax along with interest and furnishes the return of income for the specified previous year declaring undisclosed income on or before the specified date b) At the rate of 20% of the undisclosed income if: -The assessee does not admit the undisclosed income -Declares the income for the specified previous year and pays the tax along with interest on the undisclosed income on or before the specified date c) If not covered under clause (a) or (b) above –60% of the undisclosed income of the specified previous year |
| 14) | Section 271AAB(1A)-Where search has been initiated after 15th Dec 6201 | a) At the rate of 30% of the undisclosed income if: -Assessee admits the undisclosed income along with the manner of deriving the same. -Substantiates the manner in which undisclosed income was derived -Pays the tax along with interest and furnishes the return of income for the specified previous year declaring undisclosed income on or before the specified date b) At the rate of 60% of the undisclosed income if it is not covered under the provisions of clause (a) |
| 15) | Section 271AAC-Income under section 68,69,69A,69B,69C,69D determined by the assessing officer if not included by assessee or tax under Section 115BBE not paid *Section 68- Cash Credits Section 69- Unexplained Investments Section 69A- Unexplained money Section 69B-Amount of investments not fully disclosed in books of account Section 69C-Unexplained expenditure | At the rate of 10% on tax payable under Section 115BBE |
| 16) | Section 271AAD- Penalty for false entry, fake invoices etc. in books of account | If any assessing officer finds- a) A false entry, or b) An omission of any entry which is relevant for computation of total income of an assessee. He may direct the assessee to pay a penalty of an amount equal to sum of such false or omitted entries. The false entry here means the following: a) Forged or false document such as a fake invoice b) Any invoice of supply or receipts of goods or services issued by any person without actual supply or receipt of goods or services c) An invoice in respect of supply or receipt of goods or services or both to or from a person who does not exist |
| 17) | Section 271B-Failure to get the accounts audited or furnish the report as required under Section 44AB | In the case of business: ½% of the turnover/gross receipts. In the case of profession: ½% of the gross receipts OR Rs.1,50,000 Whichever is less |
| 18) | Section 271BA-Failure to furnish a report from an accountant to be furnished by persons entering into an international transaction or specified domestic transaction under Section 92E | Rs.1,00,000 |
| 19) | Section 271BB-Failure to subscribe to the eligible issue of capital referred in Section 88A(1) | 20% of such amount |
| 20) | Section 271C- Failure to deduct tax at source | Sum equal to the amount of tax not paid or failed to deduct |
| 21) | Section 271CA-Failure to collect tax at source | Sum equal to the amount of tax not collected |
| 22) | Section 271D- Accepting loan or deposit or specified sum in contravention of Section 269SS | Sum equal to the loan or deposit or specified sum taken |
| 23) | Section 271DA-Receiving any sum( Rs. 2 Lakhs or more) in contravention to the provisions of Section 269ST | Sum equal to the amount of receipt |
| 24) | Section 271E-Failure to comply with the provisions of Section 269T with regard to the repayment of loan/deposit/specific advance | Sum equal to the amount of loan/deposit/specific advance repaid. |
| 25) | Section 271F-Failure to furnish the returns as required under Section 139(1) or by its proviso before the end of the relevant assessment year Note: Applicable up to AY 2017-18 | Rs.5,000 |
| 26) | Section 271FA-Failure to furnish a statement of financial transaction or reportable account under Section 285BA(1) Failure to furnish the statement within the period specified in the notice issued under Section 285BA(5) | Rs.500 per day of default Rs.1,000 per day of default |
| 27) | Section 271FAA Furnishing inaccurate statement of financial transaction or reportable account. | Rs.50,000 |
| 28) | Section 271FAB -Failure to furnish statement/information/document within the time prescribed as provided under Section 9A(5) | Rs.5,00,000 |
| 29) | Section 271FB- Failure to furnish a return of fringe benefits as required under Section 115WD(1) within the prescribed time | Rs.100 per day of default |
| 30) | Section 271G-Failure to furnish information under Section 92D(3) in relation to an international transaction or specified domestic transactions | 2% of the value of the international transaction or specified domestic transaction |
| 31) | Section 271GA-Failure by the Indian concern to furnish any information or document under Section 285A Section 285A -Where any interest/share in an entity registered outside India obtains its value from assets located in India and -Where such foreign company holds assets in the Indian concern Such an Indian concern shall, for the purposes of determination of any income accruing or arising in India, furnish the documents within the prescribed time | 2% of the value of the transaction in respect of which such failure has taken place if such transaction had the effect of directly or indirectly transferring the right of management/control in relation to the Indian concern. Rs. 5,00,000 in any other case |
| 30) | Section 271GB- Failure to furnish the report/submitting an inaccurate report by the reporting entity which is required to furnish country-by-country report as required under Section 286. Failure to produce the documents within 30 days of notice as prescribed under Section 286(6). Furnishing inaccurate information in the report which is to be furnished under Section 286(2). | a) For delay of less than one month penalty would be Rs.5,000 for every day of default b) For delay of more than one month penalty would be Rs.15,000 for every day of default c) Continuing default even after service of notice under either under (a) or (b) above penalty would be Rs.50,000 for every day of default. Rs.5,000 for every day of default starting after the period for furnishing the document expires. Rs.5,00,000 |
| 33) | Section 271H- Failure to furnish TDS/TCS statements of furnishing incorrect information within the prescribed time Note: Applicable to TDS/TCS statements to be delivered after 01-07-2012 | Minimum: Rs.10,000 Maximum: Rs.1,00,000 |
| 34) | Section 271I-Failure in furnishing the information related to the payment made to a non-resident, which is not a company/foreign company of any sum (even though not chargeable under the provisions of this act) | Rs.1,00,000 |
| 35) | Section 271J-Incorrect information in reports/certificates by an accountant/merchant banker/registered valuer | Rs. 10,000 for each such report/certificate |
| 36) | Section 272A(1)- Any person fails/refuses to -Answer questions put by the IT authority -Sign statements which the IT authority requires him to do -Give evidence or produce the books under summons issued under Section 131(1) -Comply with the notice issued under Section 142(1) or 143(2) or 142(2A) | Rs. 10,000 for each default |
| 37) | Section 272A(2)- Failure to -Furnish the statement regarding ownership/beneficial interest in the securities in order to determine whether tax is borne on the same as required under Section 94(6) -Furnish the notice of discontinuance within 15 days under section 176(3) -Furnish information, TDS return, TCS returns and submission of statements by producers of cinematograph films under section 133/206/206C/285B -To allow inspection/copies of the register under Section 134 -To furnish return of income under Section 139(4A) or 139(4C) -To deliver a copy of the declaration for transactions where no TDS needs to be deducted as given under Section 197A -To furnish a certificate for TDS/TCS under section 203/206C -To deduct and pay tax in respect of salary as referred to in Section 226 -To furnish a statement to the person receiving the salary complete particulars of perquisites or profits in lieu of salary under section 192(2C) -To deliver in due time a copy of declaration as required under Section 206C(1A) -To deliver statements pertaining to TDS/TCS under section 200(3) or 206C(3) -To furnish quarterly returns in respect of payment of interest to residents without deduction of tax within the prescribed time and in a prescribed manner under section 206A(1) -To furnish a statement in respect of sums credited to the Central Government under Section 200(2A) or Section 206C(3A). | Rs.100 for every day of default. In sections related to TDS/TCS, the amount of penalty shall not exceed the amount of tax-deductible/collectible. |
| 38) | Section 272AA-Failure to comply with Section 133B wherein an income tax authority has the power to call for information | Maximum: Rs.1,000 |
| 39) | Section 272B- Failure to comply with Section 139A with regard to a permanent account number(PAN) -PAN is to be quoted in the documents as prescribed by the Board under Section 139(5)(c) -PAN is to be furnished to the person deducting tax by the person receiving the income PAN is to be furnished to the person responsible for collecting tax by the buyer/licensee/lessee. If in any of the circumstance the PAN furnished is false or the person believes it to be false then he shall be liable to a penalty | Rs.10,000 |
| 40) | Section 272BB- Failure to apply/quote the tax deduction/tax collection number Tax deduction number/ tax collection number falsely quoted or the person believes it to be false. | Rs.10,000 |
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