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  7. Penalty for Late Filing of Income Tax Return - List of Tax Penality

Income Tax Penalties Under the Income Tax Act

Updated on: 23 May, 2024 06:12 PM

Payment of income tax is a mandatory duty of every tax-payer who has an income. If the taxpayer commits errors or fraud in the payment of tax or in case of any other tax-related matters, income tax penalties are levied. The Income Tax Act has designed various types of penalties for different acts of mistakes or errors done by the taxpayer. These penalties impose a punishment on the taxpayer for not complying with the Income Tax rules specified under the Income Tax Act. In this article, we discuss about the penalty for late filing of income tax returns and other penalties under the Income Tax Act.

Contents

Here are some of the most common income tax penalties which are levied by the income tax department –

Income Tax Penalty Chart

Section Default Description Amount of Income Tax Penalty
140A(3) Failure to pay wholly or partly— Such amount as the Assessing Officer may impose but not exceeding tax in arrears
(a) self-assessment tax, or
(b) interest and fee, or
(c) both under section 140A(1)
158BFA(2) Determination of undisclosed income of block period Minimum: 100 percent of tax leviable in respect of undisclosed income
Maximum: 300 percent of tax leviable in respect of undisclosed income.
221(1) Default in making payment of tax Such amount as Assessing Officer may impose but not exceeding the amount of tax in arrears
234E Failure to file a statement within the time prescribed in section 200(3) or in the proviso to section 206C(3) Rs. 200 for every day during which failure continues but not exceeding tax deductible/collectible
234F Default in furnishing return of income within the time prescribed in section 139(1) Rs. 5,000 if the return is furnished after the 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.
234G Fee for default in the submission of statement/certificate prescribed under section 35/ Section 80G Rs. 200 per day
234H Fee for default in intimating the Aadhaar Number Maximum of Rs. 1,000
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
271(1)(b) If taxpayer conceals income or furnishes inaccurate particulars of income. 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.
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 percent of the difference between the tax on the partner's income assessed and tax on income returned, in addition to the 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.
271A Failure to keep, maintain, or retain books of account, documents, etc., as required under section 44AA Rs. 25,000
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
(2) Failure to report such transaction
(3) Maintaining or furnishing incorrect information or document
271AA(2) Failure to furnish information and documents as required under Section 92D(4) Rs. 5,00,000/-
271AAA Where search has been initiated before 1-7-2012, and undisclosed income found 10% of undisclosed income
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 the 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
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.
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 the assessee in his return or tax in accordance with section 115BBE has not been paid] 10% of tax payable under section 115BBE.
271AAD Penalty, if during any proceedings under the Act, it is found that in the books of accounts maintained by the 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. 100% of such false entries or omitted entry.
271B Failure to get accounts audited or furnish a report of audit as required under section 44AB One-half percent of total sales, turnover or gross receipts, etc., or Rs. 1,50,000, whichever is less
271BA Failure to furnish a report from an accountant as required by section 92E Rs. 1,00,000
271BB Failure to subscribe any amount to units issued under the scheme referred to in section 88A(1) 20 percent of such amount
271C Failure to deduct tax at source, wholly or partly, under sections 192 to 196D (Chapter XVII-B) or failure to pay wholly or partly tax u/s 115-O(2) or second proviso to section 194B Amount equal to tax not deducted or paid
271CA Failure to collect tax at source as required under Chapter XVII-BB Amount equal to tax not collected
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 the transfer of immovable property, whether or not the transfer takes place. Amount equal to loan or deposit or specified sum so taken or accepted
271DA Receiving an amount of Rs. 2 lakh or more from a person in a day [section 269ST] Amount equal to such receipt
271DB Failure to provide facility for accepting payment through prescribed electronic modes of payment as referred to in section 269SU Rs. 5,000 rupees for every day of Default
271E Repayment of any loan or deposit or specified advance otherwise than in accordance with the provision of Section 269T. "Specified advance" means any sum of money in the nature of advance, by whatever name called, in relation to the transfer of immovable property, whether or not the transfer takes place. Amount equal to loan or deposit or specified advance so repaid
271FA Failure to furnish an annual information return as required under section 285BA(1) Rs. 500 per day of default
271FAA Furnishing of inaccurate information in the statement of financial transaction or reportable account Rs. 50,000
Failure to furnish annual information return within the period specified in notice u/s 285BA(5) Rs. 1,000 per day of default
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 fulfillment of specified conditions and such other information or documents as may be prescribed. Penalty to be levied if the investment fund failed to comply with the requirement. Rs. 5,00,000
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
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. The penalty shall be: a) a sum equal to 2% of value of the 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.
271GB(1) Failure to furnish report under section 286(2) Rs. 5,000 per day upto 30 days and Rs. 15,000 per day beyond 30 days
271GB(2) Failure to produce the information and documents within the period allowed under section 271GB(6) Rs. 5,000 for every day during which the failure continues.
271GB(3) Failure to furnish a report or failure to produce information/documents under section 286, even after serving an order under section 271GB(1) or 271GB(2) Rs. 50,000 for everyday for which such failure continues beginning from the date of serving such order.
271GB(4) Failure to inform about inaccuracy in reports furnished under section 286(2) Or the furnishing of inaccurate information or documents in response to the notice issued under section 286(6). Rs. 5,00,000
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. The penalty shall not be less than Rs. 10,000 but may extend to Rs. 1,00,000
271K Penalty of default in the submission of statement/certificate prescribed under Section 35/Section 80G Rs. 10,000 to Rs. 1 lakh
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 15CA and 15CB. The penalty shall be levied in case of any failure. Rs. 1,00,000
271J Furnished incorrect information in any report or certificate by an accountant or a merchant banker or a registered valuer Rs. 10,000 for each incorrect report or certificate
272A(1) Refusal or failure to Rs. 10,000 for each failure/default
(a) answer questions
(b) sign statement
(c) attend to give evidence or produce books of account, etc., in compliance with a summon under section 131(1)
(d) comply with notice u/s 142(1), 143(2) or failure to comply with the direction issued u/s 142(2A).
272A(2) Failure to
(a) furnish the requisite information in respect of securities as required under section 94(6); 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), the penalty shall not exceed the amount of tax deductible or collectible)
(b) give notice of discontinuance of business or profession as required under section 176(3) ;
(c) furnish in due time returns, statements or certificates, deliver declaration, allow inspection, etc., under sections 133, 134, 139(4A), 139(4C), 192(2C), 197A, 203, 206, 206C, 206C(1A) and 285B;
(d) deduct and pay tax under section 226(2)
(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)
(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.
272AA(1) Failure to comply with section 133B Not exceeding Rs. 1,000
272B Failure to comply with provisions relating to PAN or Aadhaar as referred to in section 139A/139A(5)(c)/(5A)/(5C) Rs. 10,000 for each default
272BB(1) Failure to comply with section 203A Rs. 10,000 for each failure/default
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) Rs. 10,000

Watch this video to learn more about penalties under Income Tax Act.

Some Other Income Tax Penalties

Penalty for default in tax payment

A demand notice can be sent by the income tax department to the taxpayer for payment of tax, penalty, fine, interest, or any other sum payable under Section 156. After receiving the notice, if the taxpayer does not pay the tax due within 30 days of getting the notice, a penalty for default in tax payment would be levied. The amount of penalty would depend on the Assessing Officer, and it would not exceed the total tax due.

Penalty for default in paying Self-Assessment Tax

If the taxpayer is supposed to pay a self-assessment tax under the provisions of Section 140A (1) and if such self-assessment tax is not paid (either partly or fully) within the specified period, a penalty would be levied. The amount of penalty would again depend on the Assessing Officer, and it would not be more than the total tax due. Moreover, if the assessee fails to provide the return of income within the specified due date, a fee would be payable. This fee would be INR 5000 if the returns are furnished on or before 31st December of the assessment year. Moreover, if the total income is up to INR 5 lakhs, the fee would be INR 1000.

Penalty for underreporting and misreporting of income

Under-reporting of income means showing a lower income than earned so that the tax liability is reduced. If the income of the taxpayer is found to be higher than the income reported, a penalty would be levied for under-reporting of income under section 270A. The penalty would be equal to 50% of the tax liability calculated on the under-reported income. If, however, the taxpayer has resorted to misreporting income so that the income can be under-reported, the penalty would increase. In such cases, the penalty would be 200% of the tax liability calculated on the misreported income.

Penalty for not maintaining books of accounts and/or other required documents

As specified under the Income Tax Act, taxpayers are required to maintain their books of accounts according to Section 44AA. If such books of accounts are not maintained as per the provisions of this Section, a penalty would be payable under Section 271A. The amount of penalty would be INR 25,000.

If the taxpayer has entered into an international transaction, information and documentation of such transaction are required to be maintained. The income tax department might require the submission of these documents, and if the taxpayer fails to submit the required documents within 30 days of their demand, a penalty would be levied under section 271AA. The penalty would be 2% of the value of the international transaction or specified domestic transactions. If the taxpayer is an entity of the international group, the penalty might increase to INR 5 lakhs.

Penalties for failing to furnish statements of financial transactions or reportable accounts

The statement of financial transactions and reportable accounts are required to be furnished to tax authorities in specified formats and within the specified dates. Failure to meet the format or delay the submission of such reports would result in penalties. The penalties would be as follows

  • INR 500 per day if the reports are not furnished under Section 271FA,
  • INR 1000 per day if the tax department sent the tax-payer a notice under Section 285BA (5), and the reports were not furnished within 30 days of receiving such notice
  • INR 50,000 if the reports that are furnished are inaccurate in any way under Section 271FAA
  • INR 1 lakh if an investment fund does not submit a statement is required by the income tax department regarding its activities
  • If the tax-payer has entered into an international transaction or a specified domestic transaction and has not furnished the required financial statements, a penalty of 2% of the value of the transaction would be levied under Section 271G
  • If the reporting entity is part of an international group and does not furnish the financial statements as per Section 286 (2), a penalty would be INR 5000 per day if the delay is up to one month. If any delay exceeds, one-month penalty would be INR 15,000 per day. Moreover, in case of inaccurate information in the reports, a penalty would be INR 5 lakhs
  • If the Indian assets of an Indian company are held by a foreign company, the Indian company is required to submit some reports on such assets under Section 285A. If the reports are not submitted, the penalty would be 2% of the value of the transaction or INR 5000, depending on the case. Following are the possible cases -
  • INR 10,000 if an accountant, merchant banker, or registered valuer provides incorrect information in a financial report under Section 271J,
  • INR 1 lakh if payment is made to an NRI or a foreign company and reports of such payment are not furnished under Section 195 (6)

Relaxation of Income Tax Penalties

Though the above-mentioned penalties are charged in various instances, the Income Tax Act also specifies the ways to save taxpayers from paying such income tax penalties. As per the provisions of Section 273A(4) of the Act, the Principal Commissioner or Commissioner of Income Tax has the power to reduce or cancel the penalty if the conditions specified in the section are fulfilled. Furthermore, Section 273B also lists exemption of penalty under various Sections if the taxpayer can show a just cause for the failure to comply with income tax rules.

Now that you have learned about the various penalties that you might have to face under the Income Tax Act, it is time to make sure you avoid these by staying vigilant and careful. Exercising a little prudence can help you avoid these penalties and make sure you don’t get entangled in the complexities of receiving and replying to notices. The best way out is to take professional advice. You can simply consult a CA and avoid getting income tax notices. Book an eCA now!

Note: ITR filing for FY 2023-24 has started. File now to avoid penalties and notices, file ITR with the help of Tax2win’s Tax Experts. File ITR Now

Frequently Asked Questions

Q- What types of tax-payers are liable for penalty?

All types of tax-payers, individuals, HUFs, NRIs, BOIs, etc., would be liable to a penalty if they fail to comply with income tax rules.

Q- Can multiple penalties be charged from the same taxpayer?

Yes, multiple penalties can be charged from the same taxpayer if the taxpayer has made several chargeable offences.

Q- How to avail relaxation in penalty?

You can avail of relaxation in paying the penalty by fulfilling the conditions laid down in Section 273A (4) and Section 273B. You should approach the competent authority to get relaxation from paying penalties.

Q- What is the penalty for underpayment of taxes?

The penalty for underpayment of taxes is assessed by A.O.A demand notice is issued under section 156 of the Act, which states as demand notice.

Q- What are the penalties and interest on unpaid taxes?

The interest under Sections 234A, 234B, 234C will be levied on the amount not paid and the amount of penalty for any unpaid amount will depend on A.O.

Q- Can IRS penalties and interest be waived?

Yes IRS can waive penalties and interest. But it takes some time to negotiate with the IRS for a waiver or reduction.

Q- How can I reduce my IRS penalties and interest?

  1. Show them the legitimate reason for non-payment.
  2. Lower your income.
  3. Set up a good monthly payment plan.

Q- What is the punishment for evasion of income tax in India?

If any income is concealed penalty can be 100% to 300% of the taxes evade as per section 271(C).

Q- What is the penalty if I do not pay my income tax that is due before March 31?

Demand notice under section 156 is issued for underpayment of taxes, and a time of 30 days is provided and the penalty amount is assessed by A.O.

Q- What is the penalty for filing your taxes after 4/15?

There's a late filing penalty of 5% of the taxes owed for each month, or part of a month, and if your return is late, up to a maximum of 25%.

Q- How much is the penalty for filing your taxes late if you don’t owe any money or would be getting a refund?

There is no penalty for failing to file taxes late, as the penalty is levied on the percentage of taxes owed.

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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.