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Hit with a Penalty?

Penalties are distinct from tax. They are punishments for non-compliance. But they can often be appealed or waived.

What it usually means

  • Under-reporting or misreporting of income.
  • Failure to get accounts audited (for businesses).
  • Late deposit of TDS deducted.

Risks if ignored

  • Penalty amount can be 50% to 200% of tax.
  • Prosecution (Jail term) in rare, severe cases.
  • Compounding fees to settle cases out of court.

Deep Dive Analysis

The department initiates penalty proceedings separately from tax assessment. Common penalties are Section 270A (Under-reporting of income - 50% tax, Misreporting - 200% tax) or Section 271B (Audit failure). A 'Show Cause Notice' is always issued before levying a penalty.

Penalty Sections

Section 270A

Penalty for under-reporting income.

Section 271B

Failure to get Tax Audit done.

Section 234E

Late fee for TDS return filing.

Immunity

Application to waive penalty if tax is paid.

How to Solve This

Select Solution Method

Section 270AA Application

You can ask the officer to WAIVE penalty if you accept the tax addition and pay it.

1

Pay the Tax

Pay the tax demand + interest raised in the assessment order.

2

File Form 68

Submit this form within 1 month of the assessment order.

3

Condition

You must NOT appeal the tax order to CIT(A) to get this immunity.

Still unsure what to do?

If the steps above seem complicated, or if the amount involved is high, do not risk a DIY fix. Let our CAs handle it.