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Corporate Laws

IBC- Hefty Monetary Penalties to be imposed by an IP Agency

Business owners, startups, professionals, and taxpayers dealing with IBC- Hefty Monetary Penalties should understand the applicable rules. Requirements can vary by turnover...

Written byTax & Compliance Expert, TaxClue
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Corporate Laws
Published
July 30, 2021
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Jul 30, 2021
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Last updated: July 2021Verified against: Government sources

IBC- Hefty Monetary Penalties explained: this guide covers what IBC- Hefty Monetary Penalties means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

The Insolvency and Bankruptcy Board of India (IBBI) vide circular no. No. IBBI/IPA/43/2021 dated 28th day of July 2021, has issued circular on the topic “Monetary Penalties to be imposed by an Insolvency Professional Agency” in the exercise of powers under section 196 of the Insolvency and Bankruptcy Code, 2016. IBBI's move seeks to ensure insolvency professionals remain compliant with the letter and spirit of IBC and conduct themselves ethically.
  • Applicability: With immediate effect i.e. 28th day of July 2021.
Key Highlights: The Disciplinary Committee of an Insolvency Professional Agency (IPA) may impose monetary penalty on its professional members under Clause 24(2)(d) of the Schedule to the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. In the interest of objectivity and uniformity, it has been decided that an IPA shall amend its Bye-laws to provide for the maximum and minimum monetary penalty, where the Disciplinary Committee decides to impose such penalty on its professional members, under Clause 24(2)(d) of the Schedule to the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016, as under:
Sl. Contravention Monetary Penalty
1. Fails to submit disclosures, returns, etc. to IPAs or submits inadequate or incorrect disclosures, returns, etc., relating to any assignment, as required under the Code and Regulations made thereunder or Bye-laws of the IPA or called upon by the Board or the IPA. Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.
2. Accepts an assignment having conflict ofinterests with the stakeholders. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
3. Fails to maintain records properly relating to any of his assignments. Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.
4. Rejects a claim(s) without giving any proper reason while undertaking an assignment or fails to exercise due diligence in claim verification. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
5. Fails to comply with directions issued by Adjudicating Authority or the Appellant Tribunal. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
6. Outsources his duties and obligations. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
7. Fails to appoint registered valuers, wherever required, under the Code or Regulations made thereunder, for conducting valuation. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
8. Fails to supply the information called for or to comply with the requirements of information sought by the IPA, Board, Adjudicating Authority or the Appellant Tribunal or does not cooperate with the inspection or investigating authority. Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.
9. Fails to make public announcement in the manner provided for in the relevant Regulations. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
10. Fails to provide notice regarding meetings of creditors. Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.
11. Fails to reject resolution plan from ineligible resolution applicants. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
12. Fails to take action in respect of Preferential, Undervalued, Fraudulent or Extortionate transactions. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
13. Enters into contract or agreement with professionals in an incomplete and improper manner. Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.
14. Contravenes any provision of the Bye-laws, or Regulations for which no specific penalty has been provided. Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.”
Source: Circular no. IBBI/IPA/43/2021 Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.
Quick recapKey facts & short answers

Key Facts About IBC- Hefty Monetary Penalties

  • Applies in: All states across India, under the relevant central law.
  • Mode: Mostly online via the official government portal.
  • Typical timeline: Ranges from a few days to a few weeks depending on the case.
  • Non-compliance: May attract penalties, interest or late fees.
  • Expert help: TaxClue completes IBC- Hefty Monetary Penalties end to end for you.

What is IBC- Hefty Monetary Penalties?

IBC- Hefty Monetary Penalties is an important compliance and legal topic for businesses and individuals in India. This guide explains its meaning, applicability and key requirements in simple language so you can understand and stay fully compliant.

Who needs to know about IBC- Hefty Monetary Penalties?

Business owners, startups, professionals, and taxpayers dealing with IBC- Hefty Monetary Penalties should understand the applicable rules. Requirements can vary by turnover, entity type and activity, so it is best to confirm your specific case before proceeding.

When in doubt, read the provision itself rather than a summary of it — including this one.

— TaxClue Compliance Desk

IBC- Hefty Monetary Penalties: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.

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Vikas Sharma Tax & Compliance Expert at TaxClue

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Disclaimer: This article is for general informational purposes only and does not constitute professional tax, legal or financial advice. Laws, rates and due dates change and can vary by individual case — always verify with the relevant government source (e.g. mca.gov.in, incometax.gov.in) or consult a qualified professional before acting. TaxClue accepts no liability for decisions taken based on this content.

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Questions, answered

Short, direct answers to the 7 questions readers ask most on this topic.

IBC- Hefty Monetary Penalties is an important compliance and legal topic for businesses and individuals in India. This guide explains its meaning, applicability and key requirements in simple language so you can understand and stay fully compliant.

Business owners, startups, professionals, and taxpayers dealing with IBC- Hefty Monetary Penalties should understand the applicable rules. Requirements can vary by turnover, entity type and activity, so it is best to confirm your specific case before proceeding.

Typical documents include PAN, identity and address proof, business registration proof, and any category-specific forms. The exact checklist depends on your situation — TaxClue experts can prepare the correct set for IBC- Hefty Monetary Penalties and help you avoid rejections.

The process generally involves preparing documents, filing the correct form on the relevant government portal, paying applicable fees, and tracking status until approval. Following the right sequence for IBC- Hefty Monetary Penalties helps avoid delays and penalties.

Yes. Late or non-compliance related to IBC- Hefty Monetary Penalties can attract penalties, interest or late fees, and some filings have strict due dates. Staying on schedule protects you from avoidable costs — TaxClue sends timely reminders.

In most cases yes, IBC- Hefty Monetary Penalties can be handled online through the official government portal. TaxClue can complete the end-to-end process for you digitally, so you don't have to visit any office.

TaxClue's CA, CS and legal experts handle IBC- Hefty Monetary Penalties end to end — eligibility check, documentation, filing, and follow-up. Refer to Income Tax Department for official rules, and contact TaxClue for hands-on, affordable assistance.

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