Income Tax Penalties: An overview of the cost of Non – Compliance!
Failure to comply with Income Tax regulations can lead to penalties that may impact individuals and businesses. Here’s a complete breakdown of penalties under different sections of the Income Tax Act:
1 Penalty for Late Filing of Income Tax Return (Section 234F)
– Up to ₹5,000 if the return is filed after the due date (₹1,000 if income is below ₹5 lakh).
2 Penalty for Underreporting & Misreporting Income (Section 270A)
– 50% of tax payable for underreporting income.
– 200% of tax payable for misreporting (false claims, fake deductions, etc.).
3 Penalty for Concealment of Income (Section 271(1)(c))
– 100% to 300% of tax evaded for intentionally hiding income. This provision is not applicable now after introduction of section 270A. However, for old cases, it may still be relevant.
4 Penalty for Non-Payment or Delay in Tax
– Failure to pay self – assessment tax (Section 221) – Discretionary penalty up to tax due.
– Late filing of return (Section 234A) – 1% per month on unpaid tax.
– Failure to pay advance tax (Section 234B) – 1% per month on unpaid advance tax.
– Shortfall in advance tax installment (Section 234C) – 1% per month on shortfall amount.
5 Penalty for Not Maintaining Books of Accounts & Audit Failure
– Failure to maintain books of accounts (Section 271A) – ₹25,000 penalty.
– Failure to get accounts audited (Section 271B) – ₹1,50,000 or 0.5% of turnover, whichever is lower.
6 Penalty for Not Furnishing PAN (Section 272B)
– ₹10,000 for failure to quote PAN where required.
7 Penalty for Failure to File TDS/TCS Statements
– Late filing of TDS/TCS return (Section 234E) – ₹200 per day (maximum penalty = TDS amount).
– Incorrect TDS/TCS filing (Section 271H) – ₹10,000 to ₹1,00,000 penalty.
8 Penalty for Not Deducting or Depositing TDS/TCS
– Failure to deduct or deposit TDS (Section 271C) – Penalty equal to TDS not deducted or paid.
– Failure to collect or deposit TCS (Section 271CA) – Penalty equal to TCS not collected or paid.
9 Penalty for Cash Transactions
– Accepting cash above ₹20,000 for loans/deposits (Section 269SS) – Penalty equal to cash received (Section 271D).
– Cash transaction exceeding ₹2 lakh (Section 269ST) – Penalty equal to cash received (Section 271DA).
– Repaying a loan/deposit in cash above ₹20,000 (Section 269T) – Penalty equal to repayment amount (Section 271E).
10 Penalty for Providing False Information
– Failure to report international transactions (Section 271AA) – 2% of transaction value.
– Maintaining false books or fake invoices (Section 271AAD) – Penalty equal to the amount of false entry.
11 Penalty for Failure to Cooperate with the Income Tax Department
– Failure to comply with IT notices or provide required details (Section 272A) – ₹10,000 per instance.
– Failure to obtain a Taxpayer Identification Number (TIN) (Section 272AA) – ₹10,000 penalty.
