2. 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 for assessment year 2023-24 are:
•Default in making payment of tax – sec 221(1)
•Under-reporting of income – 270 A
•Failure to maintain books of accounts and other documents – 271 A
••Penalty for false entry such as fake invoices – 271 AAD
•Undisclosed income -271AAA
•Failure to furnish statements/ information -271AA(2)
Audit and Audit Report – 271B
••Failure to comply on Notice/Summon etc.
•TDS/TCS 271C
•Others
3. 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
Section 234E-Failure to prepare the statements in respect of TDS/TCS within the time
prescribed as given under section 200(3)/206C(3)
Rs.200 for every day until you file the return
The penalty cannot be more than the TDS/TCS amount.
4. Section 234F-Default in furnishing of return under
section 139(1) within the time prescribed
The assessee may fail to furnish the Income Tax return on or before the relevant due date. In such cases, the
Assessing Officer can levy a penalty. The penalty can extend up to Rs.5000. A taxpayer may fail to file the
statement of financial transaction or Annual Information Return (AIR).
Rs.5,000/-if return is furnished before 31st December of the assessment year,Rs.10,000/-in any other case. if the
income does not exceed INR 5 Lakhs then the penalty shall not exceed Rs.1,000/-
In such cases, a penalty of Rs.100 per day of default is applicable. The penalty should be continued until the default
is rectified. The income tax authorities can issue a show-cause notice to the taxpayer. The notice shall direct the
taxpayer to furnish the return within 30 days. The 30 days will be calculated with reference to the day on which the
notice was served.
5. Penalty for under-reporting of income
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.
- In case of misreporting, 200% of the amount of
tax payable on under-reported income
6. Failure to maintain books of accounts
and other documents
.
Section 271A- Failure to keep, maintain or retain the books of account, documents as
required under Section 44AA
Rs. 25,000
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.
7. Section 271AA(2)- Failure to furnish
information
Section 271AA(2)- Failure to furnish information
and document to the authority prescribed as
required under Section 92D(4)
Rs.5,00,000
8. Section 271AAD- Penalty for false entry, fake invoices etc. in books
of account
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
9. Penalty for Not Getting Accounts Audited
Section 271B-
If the assessee fails to get his accounts audited, obtain audit report, or furnish report of
such auditor, a penalty will be leviable at the ₹1,50,000 or ½% of the total sale/ Turnover/
gross receipts whichever is lesser.
Section 271BA- Failure of assessee to furnish Audit report related to foreign transaction, a
penalty @ ₹1,00,000 will be payable
.
10. Penalty for Not Furnishing Report from
a CA
Taxpayers entering into a specified domestic transaction are required to obtain a report from a CA in
the prescribed form. The report should be submitted to the income tax department. If a taxpayer fails
to comply, then a penalty of one lakh rupees shall be payable
11. TDS/TCS Section 271C
Where a person fails to deduct tax at source, he will be liable to pay a
penalty equal to the amount of tax which he has failed to deduct/ pay.
Where a person fails to collect tax at source, he will be liable to pay a
penalty equal to the amount of tax which he has failed to collect.
Failure to furnish TDS/TCS statement or furnishing incorrect statements, shall
attract a penalty ranging from ₹10,000 to ₹1,00,000
Failure to furnish information/ furnishing inaccurate information related
to TDS deduction related regarding Non residents shall attract a penalty
of ₹1,00,000
12. Undisclosed income Section
271AAA(1)- Section 271AAB(1A)
Where the income determined includes undisclosed income, a penalty @10% is payable.
However, no such penalty will be leviable, if such income was included in the return and tax
was paid before the end of the relevant previous year.
Where Search has been initiated on/ after 1/7/2012 but before 15/12/2016,
If undisclosed income is admitted during the course of search and assessee pays tax and interest and
files return, a penalty @ 10% of such undisclosed income is payable.
If undisclosed income is not admitted but the same is furnished in the return filed after such
search, 20% of such undisclosed income is payable.
In all other cases, penalty is leviable @ 60%
Where Search has been initiated on/ after 15/12/2016,
If undisclosed income is admitted during the course of Search and assessee pays tax and interest and
files return, a penalty @ 30% of such undisclosed income is payable.
In all other cases, penalty is leviable @ 60%
13. .
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
Section 271FAA- Furnishing inaccurate statement of financial transaction or reportable account. Rs.50,000
Section 271FAB- Failure to furnish statement/information/document within the time prescribed as provided
under Section 9A(5)
Rs.5,00,000
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
14. 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
15. 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).
- For delay of:
a) less than one month: Rs.5,000 for every day of default
b) more than one month: 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
16. Penalty for Failure to Pay Tax on
Casual Income
A person may have the responsibility to make payment to a person who earns casual
income. Casual income includes winning a lottery or crossword puzzle or card game or
any other game. The amount of the prize may be in excess of Rs.10,000. In such cases, the
manager of the establishment is responsible for deducting income tax while paying the
prize. If the assessee defaults in payment of tax, then the penalty leviable will be equal to
the tax-amount in relation to which a default has been committed.
17. If a report/ certificate is required to be furnished by an Accountant/
Merchant Banker/ Registered Valuer and such information is found to be
incorrect, a penalty of ₹10,000 for each incorrect report/ information is
payable
Failure to furnish information by any person who is attending/ helping
carrying the business/ profession of any person, in whose building/ place
the income tax authority has entered for collecting information shall
attract a penalty of upto ₹1,000
18. Non furnishing of report by any reporting
entity which is obliged to furnish Country by
Country report will attract penalty as follows:
Period of delay Penalty
Less than or equal to 1 month ₹5000 per day
Continuing default
₹50,000 per day from the beginning of
service of order
Submission of inaccurate information ₹5,00,000
•Non furnishing of report by any reporting entity which is obliged to furnish Country by Country report will attract penalty as follows:
19. Penalty for Failure to Cooperate with Authorities
Income tax authorities may solicit information from a person. The authorities
may request answers to question raised or may demand a person to sign
statements. The IT department may issue a summons for attendance. Failure to
comply with these directions can attract a penalty of up to Rs.10,000 for each
instance of non-compliance.
Penalty for Failure to Comply with PAN Requirements
The Income Tax Act provides a penalty in case of default in complying with the
provisions relating to PAN or knowingly quoting incorrect PAN. PAN is required
to be quoted by the taxpayer in certain prescribed financial transactions, and
a contravention which has the effect of defying the provision could attract a
penalty of up to Rs.10,000.
