Various Defaults and Penalties under Income Tax Act – Finance Act 2020 from April 2020
Offence means a breach of law or rule, offence is an illegal act committed by a person. A penalty is a punishment imposed by law for committing an offence. Assessee & Taxpayers who commits any offence under the provisions of the Income Tax Act shall be liable for penalty or prosecution. The penalty is usually levied in addition to the amount of tax paid under the act. Penalty is to be levied at the time the offence is being committed and not as it stands in the financial year for which the assessment year is being made. The various penalties covered under the Income tax act 1961 are as under:
| Section | Nature of default | Amount of penalty | Imposed by | Notes |
| 221(1) | Failure to pay the whole or part of the assessment tax or TDS or TCS | Amount of tax in arrears | Assessing officer | This is in addition to interest under section 220 |
| 270A | Misreporting or underreporting of income | 50% of tax on under reported income and 20% of tax on mis reported income | AO or CIT or CIT(A) | |
| 271A | Failure to keep, maintain or retain books of account as required by section 44AA | Rs. 25,000 | AO or CIT(A) | |
| 271AA | Failure to keep and maintain information and documents as required u/ 92D i.e. transfer pricingFails to report such transaction which he is required to do so; orMaintains or furnishes an incorrect information or document | 2% of the value of transaction | AO or CIT(A) | |
| 271AAB | Undisclosed income found in search | 30% or 60% of disclosed income | AO | Penalty in case of search: Rate of 30% shall applyIf assessee during search admits the undisclosed incomeSpecifies the manner in which such income was earnedPays tax plus interest on undisclosed income andFurnishes the return of income declaring undisclosed income before due date or date specified in Income tax noticeRate of 60% in other cases |
| 271AAC | Unaccounted income | 10% of tax on unaccounted income | Assessing officer | Penalty shall not be leviable if such income is offered in returnNo penalty on unaccounted income shall be levied u/s 270A i.e. misreporting or underreporting of income |
| 271B | Failure to get accounts audited up to due date u/s 44AB | 0.5% of Sales turnover or gross receipts (Subject to maximum of Rs. 1,50,000 | Assessing officer | If books are not maintained penalty u/s 271A shall be levied and not u/s 271B |
| 271BA | Failure to furnish report of CA u/s 92E i.e. transfer pricing report | Rs. 1,00,000 | Assessing officer | |
| 271BB | Failure to obtain TAN number | Rs 10,000 | Assessing officer | |
| 271CA | Failure to collect TCS | Sum equal to the amount of tax which such person failed to collect | JCIT | |
| 271C | Failure to deduct TDS | Sum equal to the amount of tax which such person failed to deduct | JCIT | |
| 271D | Any loan or deposit or specified advance is taken or accepted in contravention of section 269SS | Amount of the loan or deposit so taken or accepted | JCIT | |
| 271DA | Any transaction of Rs. 2,00,000 or more in contravention of section 269ST | Sum equal to amount received | JCIT | |
| 271DB | Failure to accept payment through prescribed electronic modes as per section 269SU | Rs. 5,000 per day | JCIT | |
| 271E | Any loan or deposit or specified advance is repaid in contravention of section 269T | Amount of loan or deposit repaid | JCIT | |
| 271F | Failure to furnish return of income | Rs. 5,000 | ||
| 271FA | Failure to furnish Statement of financial transaction or reportable accounts within the prescribed time | Rs. 500 per day till period of notice | Assessing officer | However, on failure to pay the same after expiry of notice penalty would be Rs. 1000 per day from the date of notice |
| 271FB | Failure to furnish return of fringe benefits | Rs. 100 day per day till the failure continues | Assessing officer | |
| 271FAA | Inaccurate information in statement of financial transaction or reportable accounts | Rs. 50,000 | Prescribed Income tax authority | Penalty shall be levied only if the prescribed authority is satisfied that: The inaccuracy is due to failure to comply with the due diligence requirement or is deliberate on the part of that person; orThe person knows of the inaccuracy at the time of furnishing the statement of financial transaction or reportable accounts =, but does not inform the prescribed Income tax authority or such other authority or agency; orThe person discovers the inaccuracy after the statement of financial transaction or reportable account is furnished and fails to furnish correct information as per section 285A(6) |
| 271G | Failure to furnish any information u/s 92D | 2% of the value of international transaction | ||
| 271GA | Failure to furnish information or document u/s 285A, i.e. by Indian concern where transaction has effect of directly or directly transferring the right of management or control in respect to Indian concern | 2% of transaction value | ||
| 271GA | Failure to furnish info or document 285A by Indian concern other cases | Rs. 5,00,000 | ||
| 271GB | Failure to furnish report u/s 286 i.e. report in respect of international group | Penalty of Rs. 5,000 every day for 1st one month where the failure continues and there after Rs. 15,000 per day beyond the period of 1 month | ||
| 271GB | Fails to provide the information and document to the income tax authority in prescribed time mentioned in notice | Rs. 5000 per day from the day on which the period for furnishing the information and document expires | ||
| 271GB | If failure referred above continues after an order has been served by the income tax authority | Rs. 50,000 for every day | ||
| 271GB | Where entity provides inaccurate information in report u/s 286 | Rs. 5,00,000 | ||
| 271H | Failure to furnish TDS or TCS statement | Penalty equal to minimum of Rs. 10,000 which may extend to Rs. 1 Lakh | ||
| 271I | Failure to furnish information or furnishing inaccurate information under section 195 i.e. TDS on sum payable to Non resident | Rs. 1,00,000 | AO | |
| 272AA | Failure to comply with section 133B i.e. failure to provide information to income tax department | Sum which may extend to Rs. 1000 | AO, JCIT | |
| 272B | Failure to comply with section 139A i.e. does not quote PAN no or quotes wrong PAN | Sum which may extend to Rs. 10000 | AO | |
| 271J | Furnishing incorrect information in reports or certificates | Rs. 10,000 for each such report or certificates | AO, CIT(A) | |
| 271FAB | Failure to furnish statement or information or document by an eligible investment fund | Rs. 500,000 | ||
| 272A | Failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. | Rs. 10,000 for each default | ||
| 271AAD | Penalty for fake invoices and false entries | Equal to the amount of fake invoice or false entries | Assessing officer |
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