Penalties Leviable under Income Tax Act,1961

Introduction

Every assessee who commits a default under the Income Tax Act is liable to face penalties as prescribed under various provisions. Depending on the nature and severity of the default, the Act provides for minimum and maximum penalty limits, which may vary from fixed amounts to a percentage of the tax involved.

In this post, we’ll break down the key penalty provisions, explain the circumstances under which they apply, and highlight the penalty amounts that can be levied for each type of non-compliance.

Penalties Leviable under Income Tax Act

Section	Nature of Default	Penalty Leviable
Section 158BFA	Applicable to block assessments in respect of search initiated u/s 132, or books of account, other documents or any assets requisitioned u/s 132A, on or after the 1st day of September, 2024.	♦ Minimum – 100% of of tax leviable in respect of undisclosed income as determined by the Assessing Officer u/s 158BC (c). ♦ Maximum – 300% of tax leviable in respect of undisclosed income as determined by the Assessing Officer u/s 158BC (c).
Section 221(1)	Makes default in  payment of tax	♦ Minimum – As directed by the Assessing officer. ♦ Maximum – Amount of tax in arrears.
Section 234E	Default in filing TDS & TCS return	₹200 per day for every day during which the failure continues.
Section 234F	Default in filing Return of Income (ITR)	♦ If total income is does not exceed ₹ 5 lakhs – ₹1000 ♦ If total income is exceeds ₹ 5 lakhs – ₹5000
Section 234G	Default in filing statement/ certificate relating to section 35 or section 80G	₹200 per day for every day during which the failure continues.
Section 234H	Default in intimating Aadhar Number	₹1000 payable at the time of intimation.
Section 270A	Under-reporting and Misreporting of Income	♦ In case of under-reporting : fifty per cent (50%) of the amount of tax payable on under-reported income. ♦ In case of misreporting : two hundred per cent (200%) of the amount of tax payable on under-reported income
Section 271(1)(b)	Failure to comply with notice issued under section 115WD(2) or Section 115WE(2) or Section 142(1) or Section 143(2) or fails to comply a direction issued u/s 142(2A)	₹10,000 for each such failure. This amount will be payable in addition to tax, if any
Section 271(1)(c)	has concealed the particulars of his income or furnished inaccurate particulars of such income.	♦ Minimum – 100% of the tax sought to be evaded ♦ Maximum – 300% of the tax sought to be evaded
Section 271A	Failure to keep and maintain, any books of account, documents, etc., as required u/s 44AA	₹25,000
Section 271AA(1)	(i) fails to keep and maintain any such information and document as required by sub-section (1) or sub-section (2) of section 92D (ii) fails to report such transaction which he is required to do so; or (iii) maintains or furnishes an incorrect information or document, with respect to an international transaction or specified domestic transaction	2% of the value of each international transaction or specified domestic transaction entered into.
Section 271AA(2)	Failure to furnish information or the document as required u/s 92D(4)	₹5,000
Section 271AAA	Search initiated by the Assessing officer (after 01-07-2007 and before 01-07-2012)	10% of the undisclosed income of the specified previous year
Section 271AAB(1A)	When search initiated after 15-12-2016 but before 01-09-2024 and undisclosed income found	(a) 30% of the undisclosed income of the specified previous year, if the assessee (i) admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax along with interest in respect of the undisclosed income and furnishes the return of income declaring such undisclosed income on or before the specified date. (b) 60% of the undisclosed income of the specified previous year, if not covered under (a)
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	10% of tax payable u/s 115BBE
Section 271AAD	During any proceedings under this Act, it is found that in the books of account maintained by any person there is (i) a false entry; or (ii) an omission of any entry which is relevant for computation of total income of such person to evade tax liability	A sum equal to the aggregate amount of such false or omitted entry
Section 271AAE	Penalty for violation of provisions of 21st proviso to Section 10(23C) or Section 13(1)(c)	(a) a sum equal to the aggregate amount of income applied as referred to in section 13(3) where the violation is noticed for the first time during any previous year; and (b) a sum equal to 200% of aggregate amount of income as referred to in section 13(3) where the violation is noticed again in any subsequent previous year.
Section 271B	Failure to get books of accounts audited or failure to furnish audit report u/s 44AB	0.5% of  total sales, turnover or gross receipts or the gross receipts in the case of profession or ₹1,50,000/- whichever is less.
Section 271BA	Failure to furnish a report u/s 92E (Transfer Pricing)	₹1,00,000/-
Section 271C	(a) Failure to deduct the tax (TDS) required under the provisions of Chapter XVII-B; or (b) Pay the tax as required by or under (i) Section 115-O(2) (ii) the proviso to section 194B (iii) the first proviso to sub-section (1) of section 194R; or (iv) the proviso to sub-section (1) of section 194S; or (v) sub-section (2) of section 194BA	A sum equal to the amount of tax failed to deduct or pay.
Section 271CA	Failure to collect the tax (TCS) as required under the provisions of Chapter XVII-BB	A sum equal to the amount of tax failed to collect
Section 271D	Failure to comply with the provisions of Section 269SS (acceptance of certain loans, deposits and specified sum)	A sum equal to the  amount of the loan or deposit or specified sum so taken or accepted.
Section 271DA	Failure to comply with the provisions of Section 269ST	A sum equal to the amount of such receipt
Section 271DB	Failure to comply with the provisions of Section 269U	A sum of ₹5,000/- for every day during which such failure continues.
Section 271E	Failure to comply with the provisions of Section 269T	A sum equal to the amount of the loan or deposit or specified advance so repaid
Section 271FA	♦Failure to furnish statement of financial transaction or reportable account. ♥ In case of notice issued u/s 285BA(5) and failure to furnish the statement within the period specified in the notice	♦ A sum of ₹5,000/- for every day during which such failure continues. ♥ A sum of ₹1,000/- for every day during which the failure continues, beginning from the day immediately following the day on which the time specified in such notice for furnishing the statement expires.
Section 271FAA(1)	Furnishing inaccurate statement of financial transaction or reportable account as per Section 285BA(1) (a) Provides inaccurate information or furnish incorrect information in the statement; or (b) fails to comply with the due diligence requirement	₹50,000/-
Section 271FAA(2)	A person who is required to furnish a statement as per Section 285BA(1) provides inaccurate information in the statement and the inaccuracy in such statement is due to false or inaccurate information.	A sum of ₹5,000/- for every inaccurate reportable account. This penalty shall be in addition to Section 271FAA(1).
Section 271FAB	Failure to furnish statement or information or document by an eligible investment fund u/s 9A(5)	₹5,00,000/-
Section 271FB	Failure to furnish return of fringe benefits u/s 115WD	A sum of ₹100 for every day during which the failure continues.
Section 271G	Failure to furnish information or document as required by Section 92D(3)	2% of the value of the international transaction or specified domestic transaction for each such failure
Section 271GA	Failure to furnish any information or document u/s 285A	(i) 2% of the value of the transaction, if such transaction had the effect of directly or indirectly transferring the right of management or control in relation to the Indian concern; (ii) ₹5,000/- in any other case.
Section 271GB(1)	Failure to furnish report u/s 286(2)	(a) ₹5,000/- for every day for which the failure continues, if the period of failure does not exceed one month; or (b) ₹15,000/- for every day for which the failure continues, beyond the period of one month.
Section 271GB(2)	Failure to produce information and documents within the time period specified in Section 286(6) i.e within 30days of the receipt of the notice	₹5,000/- for every day for which the failure continues  beginning from the day immediately following the day on which the period for furnishing the information and document expires.
Section 271GB(3)	Failure u/s 271GB (1) & (2) continues after an order has been served	₹50,000/-  for every day for which such failure continues beginning from the date of service of such order.
Section 271GB(4)	Entity referred in section 286(2) (i.e parent entity or alternate reporting entity) provides inaccurate information in the report and where: (a) the entity has knowledge of the inaccuracy at the time of furnishing the report but fails to inform the prescribed authority; or (b) the entity discovers the inaccuracy after the report is furnished and fails to inform the prescribed authority and furnish correct report within 15 days of such discovery; or (c) the entity furnishes inaccurate information or document in response to the notice issued u/s 286(6)	₹5,00,000/-
Section 271GC	Failure to furnish statement u/s 285 Section 285 – Submission of statement by a non-resident having liaison office in India. This statement to be submitted in accordance with the guidelines issued by the Reserve Bank of India under the FEMA 1999	(a) ₹1,000/-  for every day for which the failure continues, if the period of failure does not exceed 3 months; or (b) ₹1,00,000/- in any other case.
Section 271H	(a) Failure to deliver or cause to deliver TDS return u/s 200(3) or TCS return u/s 206C within the due date; or (b) furnishes incorrect information in the TDS or TCS return	Shall not be less than ₹10,000/- but which may extend to ₹1,00,000/-
Section 271-I	Failure to furnish information or furnishing inaccurate information u/s 195	₹1,00,000/-
Section 271J	In the course of any proceedings the Assessing officer finds that an accountant or a merchant banker or a registered valuer has furnished incorrect information in any report or certificate under the provisions of the Act	₹10,000/- for each such report or certificate
Section 271K	Failure to furnish statement or certificate under sec 35/ sec 80G within the time prescribed in the section.	Shall not be less than ₹10,000/- but which may extend to ₹1,00,000/-
Section 272A(1)	Failure or Refusal to: (a) State the truth or refuses to answer any question raised by the Income Tax Authority; (b) Refuses to sign any statement made by him in the course of any proceedings which the income tax authority requires him to sign; (c) To give evidence or produce books or other documents at a certain place and time and omits to attend or produce books or other documents in accordance with section 131(1); (d) fails to comply with notice issued under section 142(1) or 143(2) or directions issued u/s 142(2A)	₹10,000/- for each such default or failure.
Section 272A(2)	If any person fails to: (a) comply with a notice issued u/s 94(6); (b) give the notice of discontinuance of his business or profession as per Section 176(3); (c) Furnishing of returns, statements or particulars as per section 133 or section 206 or section 206C or section 285B within the due date; (d) allow inspection of any register as referred in Section 134 or any entry in such register or allow copies of such register or of any entry therein to be taken; or (e) furnish the return of income under section 139(4A) or section 139(4C); or (f) deliver or cause to be delivered in due time a copy of the declaration mentioned in section 197A; or (g) furnish a certificate as required by section 203 or section 206C; or (h) deduct and pay tax as required by section 226(2); or (i) furnish a statement as required by section 192(2C); (j) deliver or cause to be delivered in due time a copy of the declaration referred to in section 206C(1A); or (k) deliver or cause to be delivered a copy of the statement within the time specified in section 200(3) or the proviso to section 206C(3); or (l) deliver or cause to be delivered the statements within the time specified in section 206A(1); or (m) deliver or cause to be delivered a statement within the time as may be prescribed under section 200(2A) or section 206C(3A); or	₹500/- for every day during which the failure continues. Provided that the amount of penalty for failures in relation to a declaration mentioned in Section 197A,  a certificate as required by section 203 and returns under section 206 & 206C and statements under section 200(2A) or section 200(3) or the proviso to Section 206C sub-section (3) or (3A) shall not exceed the amount of tax deductible or collectible, as the case may be; Provided further that no penalty shall be levied under this section for the failure referred to in (k) if such failure relates to a statement referred to in section 200(3) or the proviso to section 206C(3) which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after 01-07-2012.
Section 272AA(1)	Failure to comply with the provisions of section 133B	A sum which may extend to ₹1,000/-
Section 272B	Failure to comply with the provisions of section 139A/ 139A(5)(c)/139A(5A)/ 139(5C)/ 139A(6A) Section 139A – Quoting of PAN number or Aadhar Number	₹10,000/- for each such default
Section 272BB	Failure to comply with the provisions of section 203A Section 203A – Quoting of Tax deduction and collection Number	₹10,000/-
Section 272BBB	Failure to comply with the provisions of section 206CA. Section 206CA – Quoting of Tax Collection number	₹10,000/-

Conclusion:

The Income Tax Act lays down a number of penalties to promote voluntary compliance and to discourage tax evasion or negligence and also to promote non-compliance of the Income Tax provisions.

These penalties can be avoided by the taxpayers by taking timely action, accurate reporting and professional guidance or advice. In certain cases, the law even provides relief or relaxation if the taxpayer can demonstrate a reasonable cause for non-compliance.

As a taxpayer, staying informed and compliant is not just about avoiding penalties—it’s about maintaining financial discipline and peace of mind. When in doubt, always consult a qualified tax professional and ensure you’re on the right side of the law.