Penalties Under Income Tax Act-1961
Penalties are levied for various defaults committed by the taxpayer under the Income-tax Act-1961. Some of the penalties are mandatory and a few are at the discretion of the Assessing Officer. If assessee fails to fulfill the requirements under the income tax act then assessee has to pay the penalties/fines imposed by the tax officer on the assessee. Any default in payment of fines /penalties will lead to further proceedings, which will be suffered by the assessee. There are many penalties which are given under the Income Tax Act.
Following are the penalties under income tax act applicable from AY 2022-23
| Nature of default under income tax act that will liable for penalties. | Penalty leviable under income tax act |
| Penalties under Section-140A(3):- Failure to pay wholly or partly of tax, interest and fee— | Such amount as Assessing Officer may impose but not exceeding tax in arrears |
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(a) self-assessment tax/fringe benefit tax, or |
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(b) interest, and fee, or |
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(c) both |
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| under section 140A(1) | |
| Penalties under Section-158BFA(2):- Determination of undisclosed income of block period | Minimum : 100 per cent of tax leviable in respect of undisclosed income |
| Maximum : 300 per cent of tax leviable in respect of undisclosed income. | |
| Penalties under Section-221(1):-Default in making payment of tax | Such amount as Assessing Officer may impose but not exceeding amount of tax in arrears |
| Penalties under Section-234E:-Failure to file statement within time prescribed in section 200(3) or in proviso to section 206C(3) | Rs. 200 for every day during which failure continues but not exceeding tax deductible/collectible |
| Penalties under Section-234F:-Default in furnishing return of income within time as prescribed under section 139(1) | Rs. 5,000 if return is furnished after due date specified under section 139(1). However if the total income of the person does not exceed Rs. 5 lakhs then Rs. 1,000 shall be the late filing fees. |
| Penalties under Section-234G:-Fee for default in submission of statement/certificate prescribed under section 35/Section 80G |
Penalty of Rs. 200 per day |
| Penalties under Section-234H:-Fee for default in intimating the Aadhaar Number |
Penalty of Maximum of Rs. 1,000 |
| Penalties under Section-270A(1):-Under-reporting and misreporting of income |
A sum equal to 50% of the amount of tax payable on under-reported income. However, if under-reported income is in consequence of any misreporting thereof by any person, the penalty shall be equal to 200% of the amount of tax payable on under-reported income |
| Penalties under Section-271(1)(b):-Failure to comply with a notice under section 115WD(2)/115WE(2)/142(1) or section 143(2) or failure to comply with a direction under section 142(2A) |
Penalty Fixed at Rs. 10,000 for each failure Note:- However, the above penalty shall not be levied to and in relation to any assessment for the A.Y commencing on or after the 1st day of April, 2017. |
| Penalties under Section-271(4):-Distribution of profits by registered firm otherwise than in accordance with partnership deed and as a result of which partner has returned income below the real income |
Not exceeding 150 per cent of difference between tax on partner's income assessed and tax on income returned, in addition to tax payable Note:- However, the above penalty shall not be levied to and in relation to any assessment for the A.Y commencing on or after the 1st day of April, 2017. |
| Penalties under Section-271A:-Failure to keep, maintain, or retain books of account, documents, etc., as required under section 44AA | Penalty of Rs. 25,000 |
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Penalties under Section-271AA(1):-(1) Failure to keep and maintain information and documents required by section 92D(1) or 92D(2) |
2% of value of each international transaction/or specified domestic transaction entered into |
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(2) Failure to report such transaction |
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(3) Maintaining or furnishing incorrect information or document |
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| Penalties under Section-271AA(2):-Failure to furnish information and document as required under Section 92D(4) | Penalty of Rs. 5,00,000/- |
| Penalties under Section-271AAA:-Where search has been initiated before 1-7-2012 and undisclosed income found | Penalty of 10% of undisclosed income |
| Penalties under Section-271AAB(1):-Where search has been initiated on or after 1-7-2012 but before 15-12-2016 and undisclosed income found | (a) 10% of undisclosed income of the specified previous year if assessee admits the undisclosed income; substantiates the manner in which it was derived; and on or before the specified date pays the tax, together with interest thereon and furnishes the return of income for the specified previous year declaring such undisclosed income |
| (b) 20% of undisclosed income of the specified previous year if assessee does not admit the undisclosed income, and on or before the specified date declare such income in the return of income furnished for the specified previous year and pays the tax, together with interest thereon; | |
| (c) 60% of undisclosed income of the specified previous year if it is not covered by (a) or (b) above | |
| Penalties under Section-271AAB(1A):-Where search has been initiated on or after 15-12-2016 and undisclosed income found |
(a) 30% of undisclosed income of the specified previous year if assessee admits the undisclosed income; substantiates the manner in which it was derived; and on or before the specified date pays the tax, together with interest thereon and furnishes the return of income for the specified previous year declaring such undisclosed income (b) 60% of undisclosed income of the specified previous year in any other case. |
| Penalties under Section-271AAC:-Income determined by Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D for any previous year. [if such income is not included by assessee in his return or tax in accordance with section 115BBE has not been paid] | Penalty of 10% of tax payable under section 115BBE. |
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Penalties under Section-271AAD:-Penalty, if during any proceedings under the Act, it is found that in the books of accounts maintained by assessee, there is: a) A false entry; or b) Any entry relevant for computation of total income of such person has been omitted to evade tax liability. |
Penalty of 100% of such false entries or omitted entry |
| Penalties under Section-271B:-Failure to get accounts audited or furnish a report of audit as required under section 44AB | One-half per cent of total sales, turnover or gross receipts, etc., or Rs. 1,50,000, which-ever is less |
| Penalties under Section-271BA:-Failure to furnish a report from an accountant as required by section 92E | Penalty of Rs. 1,00,000 |
| Penalties under Section-271BB:-Failure to subscribe any amount to units issued under scheme referred to in section 88A(1) | Penalty of 20 per cent of such amount |
| Penalties under Section-271C:-Failure to deduct tax at source, wholly or partly, under sections 192 to 196D (Chapter XVII-B) or second proviso to section 194B | Amount equal to tax not deducted or paid |
| Penalties under Section-271CA:-Failure to collect tax at source as required under Chapter XVII-BB | Amount equal to tax not collected |
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Penalties under Section-271D:-Taking or accepting any loan or deposit or specified sum in contravention of the provisions of Section 269SS. "Specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. |
Amount equal to loan or deposit or specified sum so taken or accepted |
| Penalties under Section-271DA:-Receipt of an amount of Rs. 2 lakh or more in contravention of provisions of Section 269ST. | Amount equal to such receipt |
| Penalties under Section-271DB:-Failure to provide facility for accepting payment through prescribed electronic modes of payment as referred to in section 269SU | Penalty of Rs. 5,000 rupees for every day of default |
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Penalties under Section-271E:-Repayment of any loan or deposit or specified advance otherwise than in accordance with provision of Section 269T. "Specified advance" means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not transfer takes place. |
Amount equal to loan or deposit or specified advance so repaid |
| Penalties under Section-271FA:-Failure to furnish an annual information return as required under section 285BA(1)2 | Penalty of Rs. 500 per day of default |
| Penalties under Section-271FAA:-Furnishing of inaccurate information in statement of financial transaction or reportable account | Penalty of Rs. 50,000 |
| Penalties under Section-271FAA:-Failure to furnish annual information return within the period specified in notice u/s 285BA(5) | Penalty of Rs. 1,000 per day of default |
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Penalties under Section-271FAB:-Section 9A provides that fund management activity carried out by an eligible offshore investment fund through an eligible fund manager acting on behalf of such fund shall not constitute business connection in India (subject to certain conditions). The provision requires that eligible investment fund shall furnish within 90 days from the end of the financial year a statement, in respect of its activities in a financial year, in the prescribed form containing information relating to fulfilment of specified conditions and such other information or documents as may be prescribed. Penalty to be levied if investment fund failed to comply with the requirement. |
Penalty of Rs. 5,00,000 |
| Penalties under Section-271G:-Failure to furnish any information or document as required by section 92D(3) | 2% of the value of the international transaction/specified domestic transaction for each failure |
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Penalties under Section-271GA:-Section 285A provides for reporting by an Indian concern if following two conditions are satisfied: a) Shares or interest in a foreign company or entity derive substantial value, directly or indirectly, from assets located in India; and b) Such foreign company or entity holds such assets in India through or in such Indian concern. In this case, the Indian entity shall furnish the prescribed information for the purpose of determination of any income accruing or arising in India under Section 9(1)(i). In case of any failure, the Indian concern shall be liable to pay penalty. |
Penalty shall be: a) a sum equal to 2% of value of transaction in respect of which such failure has taken place, if such transaction had effect of, directly or indirectly, transferring right of management or control in relation to the Indian concern; b) a sum of Rs. 5,000 in any other case. |
| Penalties under Section-271GB(1):-Failure to furnish report under section 286(2) | Penalty of Rs. 5,000 per day upto 30 days and Rs. 15,000 per day beyond 30 days |
| Penalties under Section-271GB(2):-Failure to produce the information and documents within the period allowed under section 271GB(6) | Penalty of Rs. 5,000 for every day during which the failure continues. |
| Penalties under Section-271GB(3):-Failure to furnish report or failure to produce information/documents under section 286 even after serving order under section 271GB(1) or 271GB(2) | Penalty of Rs. 50,000 for every day for which such failure continues beginning from the date of serving such order. |
| Penalties under Section-271GB(4):-Failure to inform about inaccuracy in report furnish under section 286(2) | Penalty of Rs. 5,00,000 |
| Or furnishing of inaccurate information or document in response to notice issued under section 286(6). | |
| Penalties under Section-271H:-Failure to deliver/cause to be delivered a statement within the time prescribed in section 200(3) or the proviso to section 206C(3), or furnishes incorrect information in the statement | W.e.f. 1-10-2014 Assessing Officer may direct payment of penalty. Penalty shall not be less than Rs. 10,000 but may extend to Rs. 1,00,000 |
| Penalties under Section-271K:-Penalty of default in submission of statement/certificate prescribed under section 35/Section 80G | Penalty of Rs. 10,000 to Rs. 1 lakh |
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Penalties under Section-271-I:-As per section 195(6) of the Act, any person responsible for paying to a non-resident or to a foreign company, any sum (whether or not chargeable to tax), shall furnish the information relating to such payment in Form No. 15CA and 15CB. Penalty shall be levied in case of any failure. |
Penalty of Rs. 1,00,000 |
| Penalties under Section-271J:-Furnishing of incorrect information in any report or certificate by an accountant or a merchant banker or a registered valuer | Penalty of Rs. 10,000 for each incorrect report or certificate |
| Penalties under Section-272A(1):-Refusal or failure to : | Penalty of Rs. 10,000 for each failure/default |
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(a) answer questions |
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(b) sign statement |
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(c) attend to give evidence or produce books of account, etc., in compliance with summons under section 131(1) |
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(d) comply with notices u/s 142(1)/143(2) or failure to comply with direction issued u/s 142(2A). |
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| Penalties under Section-272A(2):-Failure to : | |
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(a) furnish requisite information in respect of securities as required under section 94(6) ; |
Penalty of Rs. 10,000 for each failure/default. (In respect of penalty for failure, in relation to a declaration mentioned in section 197A, a certificate as required by section 203 and returns u/ss 206 and 206C and statements under Section 200(2A) or section 200(3) or proviso to section 206C(3) or section 206C(3A), penalty shall not exceed amount of tax deductible or collectible) |
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(b) give notice of discontinuance of business or profession as required under section 176(3) ; |
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(c) furnish in due time returns, statements or certificates, deliver de-claration, allow inspection, etc., under sections 133, 134, 139(4A), 139(4C), 192(2C), 197A, 203, 206, 206C, 206C(1A) and 285B; |
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(d) deduct and pay tax under section 226(2) |
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(e) file a copy of the prescribed statement within the time specified in section 200(3) or the proviso to section 206C(3) (up to 1-7-2012) |
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(f) file the prescribed statement within the time specified in section 206A(1) (g) Failure to deliver or cause to be delivered a statement under Section 200(2A) or Section 206C(3A) within prescribed time. With effect from June 1, 2015, it is mandatory for an office of the Government, paying TDS or TCS, as the case may be, without production of a challan, to deliver a statement in the prescribed form and manner to the prescribed authority. |
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| Penalties under Section-272AA(1):-Failure to comply with section 133B | Penalty of Not exceeding Rs. 1,000 |
| Penalties under Section-272B:-Failure to comply with provisions relating to PAN or Aadhar as referred to in section 139A/139A(5)(c)/(5A)/(5C) | Penalty of Rs. 10,000 for each default |
| Penalties under Section-272BB(1):-Failure to comply with section 203A | Penalty of Rs. 10,000 for each failure/default |
| Penalties under Section-272BB(1A):-Quoting false tax deduction account number/tax collection account number/tax deduction and collection account number in challans/certificates/statements/documents referred to in section 203A(2) | Penalty of Rs. 10,000 |
Note : No penalty is imposable for any failure under sections 271(1)(b), 271A, 271AA, 271B, 271BA, 271BB, 271C, 271CA, 271D, 271E, 271F, 271FA, 271FAB, 271FB, 271G, 271GA
, 271GB, 271H, 271-I, 272A(1)(c) or (d), 272A(2), 272AA(1), 272B, 272BB(1), 272BB(1A), 272BBB(1), 273(1)(b), 273(2)(b) and 273(2)(c) if the person or assessee proves that there was reasonable cause for such failure (section 273B).
Section 273AA provides that a person may make application to the Principal Commissioner/Commissioner for granting immunity from penalty, if (a) he has made an application for settlement under section 245C and the proceedings for settlement have abated; and (b) penalty proceeding have been initiated under this Act. The application shall not be made after the imposition of penalty after abatement.
1 With effect from assessment year 2015-16 "annual information return" has been changed to "statement of financial transaction or reportable account" and word "return" has been changed to "statement".
2 With effect from assessment year 2015-16 a new section 271FAA has been inserted to provide for a penalty of Rs. 50,000 for furnishing inaccurate statement of financial transaction or reportable account in certain cases.
3 With effect from 1-10-2014 TPO can also levy penalty.
4 Section 271H as amended with effect from 1-10-2014 provides that penalty shall be levied by Assessing Officer.