{"id":30817,"date":"2020-04-15T11:21:27","date_gmt":"2020-04-15T05:51:27","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=30817"},"modified":"2020-11-23T16:10:58","modified_gmt":"2020-11-23T10:40:58","slug":"list-of-penalties-under-the-income-tax-act","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/list-of-penalties-under-the-income-tax-act\/","title":{"rendered":"A Complete List of Penalties under the Income Tax Act"},"content":{"rendered":"<p class=\"has-drop-cap\">A taxpayer must pay the taxes timely and also <strong><a href=\"https:\/\/enterslice.com\/income-tax-return-filing\"><em>filing of the income tax returns<\/em><\/a><\/strong> assures that the Government has the money for public welfare and public benefit at any point of time. To ensure and also to prevent any default in paying taxes or disclosing of any information, there are several penalties prescribed under the Income Tax Act. Penalties under the Income Tax Act are imposed on an assessee for non-compliance. Under the Income Tax Act, 1961 penalties are levied for several defaults committed by the taxpayer. There are some obligatory penalties, whereas some penalties are at the discretion of the tax authorities. In this article, we will cover the provisions relating various penalties under the Income-tax Act, 1961. In this article, we will discuss the various penalties under the Income Tax Act. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Penalties under the Income Tax Act, for default in making payment of Self\nAssessment Tax<\/h2>\n\n\n\n<ul><li>According to section 140A(1) of the Income-tax Act, any tax which is due after allowing the credit for TDS, advance tax, etc. together with interest and fee should be paid before filing the return of income.<\/li><li>The tax paid according to section 140A (1) is called &lsquo;self-assessment tax&rsquo;.<\/li><li>As prescribed in section 140A(3), in case a person fails to pay the self-assessment tax either wholly or partly then he will be treated as an assessee in default in respect of the unpaid amount.<\/li><li>As per section 221(1), if a taxpayer is considered to be in default, then he shall be held liable to pay the penalty of such amount as imposed by the Assessing Officer. And in case the default continues, and the taxpayer will pay such amount as directed by the assessing officer. However, the total amount of penalty cannot exceed the tax amount in arrears.<\/li><li>Before charging any penalty under section 221(1), an opportunity shall be provided to the taxpayer of being heard. If the taxpayer succeeds in proving that the default made was for a good and sufficient reason, no penalty will be charged.<\/li><li>If the taxpayer fails to file tax returns within due date as prescribed under section 139(1) then as per section 234F, the individual will be required to pay a fee of :<ul><li>a) Rs. 5000 if the return is filed on or before December 31 of the assessment year. <\/li><li>b) Rs. 10,000 in any other case. <\/li><\/ul><\/li><\/ul>\n\n\n\n<p>In case the total income of the individual does not\nexceed Rs. 5 lakh, then penalty fee payable will be Rs. 1000.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Penalty for default in making payment of tax<\/h2>\n\n\n\n<ul><li><em>According\nto section 220(1), the taxpayer on receiving demand notice under section 156 of\nthe Act, for payment of tax (other than advance tax) shall pay the amount\nwithin a period of 30 days. <\/em><\/li><li><em>The\npenalty prescribed under section 221(1) is a general penalty and can be levied\nin all the cases in which the taxpayer is treated as an assessee in default.<\/em><\/li><li><em>&nbsp;Before charging penalty as the taxpayer shall\nget a reasonable opportunity of being heard.<\/em><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Late filing fees for delay in filing the TDS\/TCS statement <\/h2>\n\n\n\n<p><em>As\nmentioned in section 200(3) every person is liable to deduct tax at source and\nmust submit a statement in respect of tax deducted by him, i.e. TDS return. <\/em><\/p>\n\n\n\n<p><em>&nbsp;As per the provision to section 206C (3, every\nperson who is liable to collect tax at source must furnish a statement in\nrespect of the tax levied by him, i.e. TCS return.&nbsp; <\/em><\/p>\n\n\n\n<p>Penalty for late filing\nof TDS\/TCS return is specified in Section 234E &ndash;According to this section in\ncase, a person fails to file TDS\/TCS Return shall be liable to pay a sum of Rs.\n200 for each day during which the failure continues.<\/p>\n\n\n\n<p>However, the amount of\nlate fees shall not exceed the amount of TDS or TCS return to be paid.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Penalties under the Income Tax Act, for default in furnishing return of\nincome<\/h2>\n\n\n\n<p>If the assessee who is required to file income tax\nreturns fails to file it within the due date as per clause under section\n139(1), then according to section 234F, he will be fined:<\/p>\n\n\n\n<ol><li>Rs.5000,\nin case the return is filed on or before December 31 of the assessment year.<\/li><li>Rs.10,000\nin any case other than this.<\/li><li>In\nany case, if the total income of an individual does not exceed Rs. 5 lakh then\nthe payable fee amount is Rs.1000.<\/li><\/ol>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/tds-penalty-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">TDS Penalty in India<\/a><\/mark>.<\/p><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Penalty for failure to comply with a notice issued under section 142(1) or\n143(2) or direction for audit under section 142(2A)<\/h2>\n\n\n\n<p>Section 272A levies a\npenalty of Rs. Ten thousand for failure to follow the notice issued to the\ntaxpayer as per Section 142(1) or Section 143(2) or section 142(2A).<\/p>\n\n\n\n<p>As per section 142(1),\nthe Assessing Officer can issue a notice asking the taxpayer to file returns or\nproduce any documents as and when required.<\/p>\n\n\n\n<p>According to Section\n142(2A), an assessee needs to conduct a special audit. <\/p>\n\n\n\n<p>Section 143(2) &ndash;the AO\nwill issue a notice before conducting scrutiny assessment. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Penalty for underreporting and misreporting of income<\/h2>\n\n\n\n<p>The taxpayer many times reduces his tax liability by\nunderreporting or misreporting of income. In such types of cases, as per\nSection 270A, a penalty will be levied on the taxpayer. The rate of penalty\ncharged shall be 50% of the payable tax on under-reported income.<\/p>\n\n\n\n<p>However, if the under-reporting of income results\nfrom misreporting of income, the taxpayer shall be held liable for a penalty at\nthe rate of 200% of the tax payable on the misreported income.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Misreporting of Income <\/h2>\n\n\n\n<p><strong>The following cases are considered as misreporting of income:<\/strong><\/p>\n\n\n\n<p>&nbsp;1. Any type of Misrepresentation or suppression of facts<\/p>\n\n\n\n<p>2. Failure to maintain the investments in the books of account<\/p>\n\n\n\n<p>&nbsp;3. The claim\nof expenses not validated by any evidence<\/p>\n\n\n\n<p>&nbsp;4. Making any\nfalse entry in the books of account<\/p>\n\n\n\n<p>&nbsp;5. Failure to\nproof any receipt in books of account having a bearing on total income<\/p>\n\n\n\n<p>&nbsp;6. Failure to\nshow any international transaction in books of accounts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Penalty for failure to keep, maintain, or retain books of account,\ndocuments, etc., as per section 44AA<\/h3>\n\n\n\n<p>A taxpayer as per Income Tax Act, 1961 is required\nto maintain the books of account, as mentioned in section 44AA.<\/p>\n\n\n\n<p>&nbsp;In case of\nany failure to maintain the books of accounts by the taxpayer a penalty of Rs,\n25,000 will be charged as per Section 271A.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Penalty for Failure to Keep and Maintain Information and Document Related\nto International Transaction or Specified Domestic Transaction<\/h3>\n\n\n\n<p>Section 92D specifies that every person getting into\nan international transaction or specified domestic transaction shall keep and\nmaintain such information and documents as may be prescribed in this regard\nunder rule 10D.<\/p>\n\n\n\n<p>The penalty is levied as\nper section 271AA is attracted in the case of any of the following failures\nmade by the taxpayer: <\/p>\n\n\n\n<ol><li>If an individual fails to maintain\ninformation and documents related to the international transaction or specified\ndomestic transaction as per `section 92D read with rule 10D. <\/li><li>&nbsp;If the taxpayer fails to report the\ninternational transaction or specified domestic transaction.<\/li><li>Maintaining and furnishing incorrect\ninformation related to the international transaction or specified domestic\ntransaction.<\/li><\/ol>\n\n\n\n<p>The Penalty amount\ncharged shall be a sum equal to 2% of the value of each international\ntransaction or specified domestic transaction made by the taxpayer.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">&nbsp;Penalty in Case of Search <\/h2>\n\n\n\n<p>The tax authorities to\nunearth the undisclosed income generally conduct a search at the premises of\nthe taxpayer. Section 132 provides the situations in which the tax authorities\ncan instigate a search. Penalty for this default has been explained under\nsection 271AAB.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Penalty in case of Income from Undisclosed Sources<\/h2>\n\n\n\n<p>The AO makes addition to the taxpayers income as per\nsections 68, 69, 69A, 69B, 69C or Section 69D.In case the taxpayer fails to\nexplain the nature and source of his income will be charged penalty under\nSection 271AAC of the Income Tax Act.<\/p>\n\n\n\n<p>The AO will levy penalty at the rate of 10% of the\ntax payable under section 115BBE if any addition is made under section 68, 69, 69A,\n69B, 69C and section 69D.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Failure to get accounts audited or furnished a report of audit as per\nsection 44AB<\/h2>\n\n\n\n<ul><li>According to Section 44AB the accounts\nof the taxpayer are to be audited. In case a taxpayer fails to audit his\naccounts, then he can be held liable for penalty under section 271B. <\/li><li>Penalty under section 271B shall be\ncharged for failure to get the accounts audited or failure to furnish a report\nof audit as required under section 44AB. <\/li><li>Penalty shall be one-half per cent of\ntotal sales, turnover or gross receipts, etc., or Rs. 1, 50,000, whichever is\nless.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Penalty for failure to provide a Report from an Accountant as per Section 92E Section 92E<\/h2>\n\n\n\n<ul><li>According to Section 92E, a report from\na chartered accountant must be presented by every person getting into an\ninternational transaction or specified domestic transaction. In case the taxpayer\nfails to provide the report as required, then he shall be liable to pay penalty\nunder section 271BA.<\/li><li>Penalty prescribed under section 271BA\nfor failure to provide a report from the chartered accountant Rs. 1,00,000.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Penalty for Failure to Pay Tax With respect to Winning from lottery or\nCrossword Puzzle<\/h2>\n\n\n\n<ul><li>If any taxpayer fails to pay whole or\npart of the tax as per section 194B than, such person shall be liable to pay\nthe penalty under section 271C of an amount equal to tax not paid.<\/li><li>Penalty for failure to collect tax at\nsource <\/li><li>Section 206C of the Act provides that\ncertain items of which tax is to be collected at source by the person receiving\npayment in respect of certain specified items.<\/li><li>In case the person who is required to\ncollect tax at source fails to collect the tax, he shall be liable to pay the\npenalty as per section 271CA. The penalty amount shall be equal to tax not\ncollected.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Accepting Certain Loans\/ Deposits\/Specified sum in contravention of provisions\nof section 269SS<\/h2>\n\n\n\n<ul><li>As per Section 269SS, no person shall\ntake or accept any loan\/deposit\/specified sum exceeding Rs. 20,000 which is\ndone by payee cheque or account payee demand draft or use of electricity\nclearing system through a bank account or through such other electronic modes\nas may be prescribed.<\/li><li>Specified sum here means any sum of\nmoney received as advance or otherwise, with respect to the transfer of an\nimmovable <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Property&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Property refers to the legal designation of ownership over valuable items or assets held by an individual or a business. This ownership grants the holder certain legal rights to use, consume,(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/property\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>property<\/a>, whether or not the transfer takes place.<\/li><li>Breaching the provisions of section\n269SS will attract penalty under section 271D.<\/li><li>Penalty as per proviso to section 271D\nshall be levied of an amount equal to loan or deposit taken or accepted.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Penalty for not providing the facility for accepting payment through\nprescribed electronic modes of payment<\/h2>\n\n\n\n<p>Section 269SU has been inserted by the Finance\n(No.2) Act, 2019. As per this section every person engaged in business shall\naccept online payments if gross receipts for such business exceed Rs. 50 crore\nduring the immediate preceding year.<\/p>\n\n\n\n<p>Penalty of Rs. 5,000 will be charged if payment is\nnot accepted by digital mode as per section 271DB. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Failure to furnish statement of financial transaction or reportable account\n(previously called as &lsquo;Annual Information Return (AIR)&rsquo;) as required under\nsection 285BA (1)<\/h2>\n\n\n\n<p>&nbsp;Non-filing of\nstatement of financial transaction or reportable account will attract penalty\nunder section 271FA. Penalty shall be charged at Rs. 500 per day of default.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Penalty for failure to comply with provisions of section 133B <\/h2>\n\n\n\n<p>The tax authorities can enter the place of business\nof the assesee to collect details as required. If the taxpayer fails to comply\nwith the provisions of section 133B, the penalty shall be charged under Section\n272AA (1) up to Rs. 1000.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion <\/h3>\n\n\n\n<p>The income tax returns or TDS\/TCS must be filed\nwithin the due date. Failure to comply with the laws mentioned in this article\nleads to various penalties as per severity of the default. The Indian Income\nTax Act lays down all the laws related to the payment and filing of taxes in\nIndia is an essential piece of legislation. Penalties under the Income Tax Act,\nfor default in furnishing return of income.<\/p>\n\n\n\n<div class=\"read\"><p><b>More on Tax:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/prosecution-punishment-income-tax\/\" target=\"_blank\" rel=\"noopener noreferrer\">Prosecution and Punishment Under Income Tax<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>A taxpayer must pay the taxes timely and also filing of the income tax returns assures that the Government has the money for public welfare and public benefit at any point of time. To ensure and also to prevent any default in paying taxes or disclosing of any information, there are several penalties prescribed under [&hellip;]<\/p>\n","protected":false},"author":27,"featured_media":30820,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1473,2435],"tags":[2906],"acf":{"service_id":"78"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>A Complete List of Penalties under the Income Tax Act - Enterslice<\/title>\n<meta name=\"description\" content=\"To ensure and also to prevent any default in paying taxes or disclosing of any information, there are several penalties prescribed under the Income Tax Act.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/list-of-penalties-under-the-income-tax-act\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A Complete List of Penalties under the Income Tax Act - Enterslice\" \/>\n<meta property=\"og:description\" content=\"To ensure and also to prevent any default in paying taxes or disclosing of any information, there are several penalties prescribed under the Income Tax Act.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/list-of-penalties-under-the-income-tax-act\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2020-04-15T05:51:27+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-11-23T10:40:58+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/04\/Penalties-Under-the-Income-Tax-Act.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"670\" \/>\n\t<meta property=\"og:image:height\" content=\"352\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Deepti Shikha","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/Deepti-Shikha.jpg","authorDescription":"Deepti is a Law graduate with an avid interest in reading and very proficient in summarizing legal cases. 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