Ask Veda

TaxClue AI · Active
Namaste! I'm Veda — TaxClue's AI compliance assistant. 🙏

Ask me anything about GST, ITR, Company registration, Trademark, FSSAI or any compliance topic. When you're ready, I'll connect you with our expert for a free callback.
Share your details — our expert will call you
Powered by TaxClue · India's Trusted Compliance Platform
Guide · Income Tax

Income Tax Penalties —
Section 270A, 271, 271B & 271H

What penalty applies when income is under-reported or misreported, how the older Section 271(1)(c) still works, and the separate penalties for tax-audit and TDS-return defaults — with immunity under Section 270AA.

TaxClue Editorial Desk Updated 18 August 2026 5 min read 16 FAQs answered
Updated for AY 2026-27 CA Expert Reviewed Notice & Penalty Help
Quick Answer

From AY 2017-18 the main penalty section is Section 270A, which replaced Section 271(1)(c). Under-reporting income attracts 50% of the tax on the under-reported amount; deliberate misreporting attracts 200%. The old Section 271(1)(c) (100%–300%) still governs AY 2016-17 and earlier. Separate sections cover tax-audit defaults (271B), TDS/TCS-return defaults (271H) and late ITR filing (234F). All are levied over and above the tax and interest due.

Under-reporting 50%
Misreporting 200%
271B audit ₹1.5L
271H TDS ₹1L
At a glance

Key Income-Tax Penalty Sections

The penalty rate, cap and trigger for every common default. Rates are current for FY 2025-26 (AY 2026-27) after the Union Budget 2025.

SectionDefaultPenaltyCap
270AUnder-reporting income (AY 2017-18+)50% of taxNo upper cap
270AMisreporting / deliberate concealment200% of taxNo upper cap
271(1)(c)Concealment (up to AY 2016-17)100%–300%300% of tax evaded
271BFailure to get accounts tax-audited0.5% of turnover₹1,50,000
271HLate / non-filing of TDS-TCS return₹10,000 min₹1,00,000
234EFee for delay in TDS-TCS statement₹200 / dayUp to TDS amount
234FLate filing of ITR (ex-271F)₹1,000 / ₹5,000₹5,000
271AATransfer-pricing docs not kept2% of valueNo upper cap
271CFailure to deduct TDS= tax not deductedAmount of TDS

The Income-tax Act, 2025 (effective AY 2026-27) renumbers these clauses — e.g. Section 270A maps broadly to clause 439 — but the familiar 1961 numbers remain the search and reference standard.

AY 2017-18 onwards

Section 270A — Under-Reporting vs Misreporting

Under-reporting means the assessed income is higher than the returned income — omissions, arithmetical errors, a disallowed deduction or a difference of opinion, without deliberate intent. Penalty: 50% of the tax on the under-reported income.

Misreporting is the graver charge: false entries, fraudulent claims, suppression of evidence, manipulation of accounts or fictitious losses. Penalty: 200% of the tax on the misreported amount — and no immunity under 270AA.

50%

Under-reporting — immunity possible

  • Assessed income > returned income
  • Genuine omissions or errors
  • Disallowed deduction / interpretation
  • Immunity available under Section 270AA
  • No prosecution if bona fide
vs
200%

Misreporting — no relief

  • False entries or fraudulent claims
  • Suppression of facts / evidence
  • Manipulated accounts, fictitious loss
  • No Section 270AA immunity
  • Possible prosecution u/s 276C
AIS & Form 26AS make omissions easy to catch

For FY 2025-26 the department cross-matches your return against AIS, TIS and Form 26AS. Interest, dividends, capital gains or contract receipts that appear there but not in your ITR are flagged automatically and can trigger a Section 270A under-reporting penalty. Reconcile before filing.

Received a Section 270A show-cause notice? Get your reply drafted by a CA.

Reply to the Notice →
Audit & TDS defaults

Section 271(1)(c), 271B & 271H

Beyond income under-reporting, three penalties catch out businesses and deductors most often — the legacy concealment penalty and the audit / TDS-return defaults.

SectionApplies toPenaltyKey point
271(1)(c)Concealment up to AY 2016-17100%–300%Replaced by 270A from AY 2017-18
271BTurnover crosses tax-audit limit but no audit0.5% of turnover, max ₹1.5LReasonable cause can waive it
271HTDS/TCS return filed late or not filed₹10,000 to ₹1,00,000Nil if fixed within 1 month

A separate ₹200/day fee under Section 234E runs from the TDS-return due date and is not a penalty — it cannot be waived.

271H one-month waiver window

From 1 April 2025 the Section 271H waiver window was cut from one year to one month. No 271H penalty applies if you (a) deposit the TDS/TCS, (b) pay the Section 234E fee and interest, and (c) file the return within one month of the due date. Miss that window and the ₹10,000–₹1,00,000 penalty can be levied.

  • 271B (tax audit): 0.5% of total sales/turnover/gross receipts, capped at ₹1,50,000 — no penalty if there was a reasonable cause (illness, seized records, etc.).
  • 271H (TDS return): minimum ₹10,000, maximum ₹1,00,000, plus the separate ₹200/day Section 234E fee.
  • 271C: failure to deduct TDS attracts a penalty equal to the tax not deducted.

Behind on TDS returns? File and fix defaults before the penalty is levied.

File TDS Returns →
Section 270AA

Immunity from Penalty & Prosecution

Section 270AA lets you escape a Section 270A penalty and Section 276C prosecution for under-reporting (not misreporting) if strict conditions are met on time.

  • Pay the assessed tax & interest within 30 days of the demand notice (u/s 156)
  • Apply for immunity in the prescribed form within the specified time
  • Do not file — or withdraw — any appeal against the assessment
  • Under-reporting only — misreporting cases are excluded
Worked example

How the 270A Penalty Adds Up

50% Under-reporting

Under-reported income₹4,00,000
Tax @ 30% slab₹1,20,000
Penalty @ 50%₹60,000
Penalty payable₹60,000

200% Misreporting

Misreported income₹4,00,000
Tax @ 30% slab₹1,20,000
Penalty @ 200%₹2,40,000
Penalty payable₹2,40,000

The penalty is on the tax on the extra income, not on the income itself, and is charged in addition to that tax plus interest under Sections 234B/234C.

Penalty vs prosecution are different things

A Section 270A penalty is a monetary charge. A wilful attempt to evade tax can also draw prosecution under Section 276C — imprisonment of up to 7 years — which is in addition to, not instead of, the penalty. Prosecution needs the Principal Commissioner’s sanction and is reserved for serious, deliberate fraud.

Government sourcesPenalty provisions: incometax.gov.in · Late TDS-return fee/penalty: incometaxindia.gov.in · Section 270A / 270AA — Finance Act 2016 (w.e.f. AY 2017-18) · Section 271B, 271H, 234E & 234F — Income-tax Act 1961 (renumbered under the Income-tax Act, 2025)
People also ask

Frequently Asked Questions

270A basics
What is the penalty under Section 270A of the Income Tax Act?
Section 270A levies a penalty of 50% of the tax on under-reported income, rising to 200% of the tax where the under-reporting results from misreporting (deliberate concealment, false entries or suppression of facts). It applies from Assessment Year 2017-18 and replaced the older Section 271(1)(c). The penalty is over and above the tax and interest payable.
What is the difference between under-reporting and misreporting of income?
Under-reporting means the assessed income is more than the income you returned — typically genuine omissions, arithmetical errors, a disallowed deduction or a difference of opinion, with no deliberate intent; the penalty is 50% of tax. Misreporting is deliberate: false entries, fraudulent claims, suppression of evidence, manipulation of accounts or fictitious losses; the penalty is 200% of tax and no immunity is available.
Does Section 270A apply to AY 2016-17 and earlier?
No. Section 270A was inserted by the Finance Act 2016 and applies from AY 2017-18 onwards. For AY 2016-17 and earlier, the older Section 271(1)(c) applies — a penalty of 100% to 300% of the tax sought to be evaded on concealed income. The Assessing Officer must specify which section the charge is under.
Is the 270A penalty on the income or on the tax?
On the tax. The penalty is a percentage of the tax attributable to the under-reported or misreported income, not of the income itself. For example, on ₹4,00,000 of under-reported income taxed at 30% (₹1,20,000 tax), the 50% penalty is ₹60,000; a 200% misreporting penalty would be ₹2,40,000.
Has Section 270A changed under the Income-tax Act, 2025?
The Income-tax Act, 2025 (effective from AY 2026-27) re-writes and renumbers the 1961 Act — the 270A penalty scheme is carried forward under a new clause (broadly clause 439) with the same 50%/200% structure. The substance is unchanged; the familiar "Section 270A / 271" numbering remains the common reference. Always confirm the current clause before responding to a notice.
271, 271B & 271H
What is Section 271(1)(c) of the Income Tax Act?
Section 271(1)(c) was the penalty for concealment of income or furnishing inaccurate particulars, ranging from 100% to 300% of the tax sought to be evaded. It applies to AY 2016-17 and earlier assessment years. From AY 2017-18 it was replaced by Section 270A, which uses the clearer under-reporting (50%) and misreporting (200%) framework.
What is the penalty under Section 271B for not getting a tax audit?
Section 271B penalises failure to get accounts audited (or to furnish the audit report) when turnover crosses the tax-audit limit. The penalty is 0.5% of total sales, turnover or gross receipts, subject to a maximum of ₹1,50,000. No penalty is levied if you can show a reasonable cause for the default under Section 273B.
What is the penalty under Section 271H for late TDS return filing?
Section 271H penalises late filing or non-filing of a TDS/TCS return, with a penalty of a minimum ₹10,000 and a maximum ₹1,00,000. It is separate from — and in addition to — the Section 234E late fee of ₹200 per day. No 271H penalty applies if the TDS is deposited, the 234E fee and interest are paid, and the return is filed within one month of the due date.
What is the ₹200 per day charge on late TDS returns?
That is the Section 234E late-filing fee — ₹200 for each day the TDS/TCS statement is delayed, capped at the total TDS/TCS amount. Unlike the 271H penalty, the 234E fee is mandatory and cannot be waived for reasonable cause; it must be paid before the return can be filed.
What is the difference between Section 234E and Section 271H?
Section 234E is a fee of ₹200/day for delay in filing a TDS/TCS statement, capped at the TDS amount, and cannot be waived. Section 271H is a penalty of ₹10,000–₹1,00,000 for late or non-filing, which is not levied if you file within one month of the due date after paying the 234E fee and interest. The two run alongside each other.
Immunity & notices
How can I avoid a penalty under Section 270A?
File accurately and disclose all income appearing in AIS/Form 26AS, so there is no under-reporting to penalise. If a notice arrives, respond promptly with supporting documents; for genuine mistakes or a bona fide difference of interpretation, a written explanation may persuade the Assessing Officer to drop the penalty. For under-reporting (not misreporting), Section 270AA gives immunity if you pay the tax and interest within 30 days and apply in the prescribed form without filing an appeal.
What is Section 270AA immunity and who can claim it?
Section 270AA gives immunity from a Section 270A penalty and Section 276C prosecution if you pay the assessed tax and interest within 30 days of the demand notice under Section 156, apply for immunity in the prescribed form within the specified time, and do not file (or withdraw) any appeal against the assessment. It is available only for under-reporting — deliberate misreporting is excluded.
Can I get immunity by simply paying the tax and interest?
Partly. Paying the tax and interest is necessary but not sufficient — for Section 270AA immunity you must also apply in the prescribed form within the time allowed and must not pursue an appeal against the assessment. Even then, immunity covers only under-reporting; if the charge is misreporting, the 200% penalty stands and immunity is not available.
What is the difference between a 270A penalty and prosecution under 276C?
A Section 270A penalty is a monetary charge — 50% of tax for under-reporting, 200% for misreporting. Prosecution under Section 276C is a criminal proceeding for a wilful attempt to evade tax, punishable with imprisonment of up to 7 years. Prosecution is in addition to (not instead of) the penalty, needs the Principal Commissioner’s sanction, and is reserved for serious, deliberate fraud.
Are these penalties charged on top of the tax and interest?
Yes. Penalties under Sections 270A, 271(1)(c), 271B, 271H and 271AA are levied over and above the regular tax, interest under Sections 234A/B/C and any late-filing fee. They are separate and cumulative — for example, a business can face both a 271B audit penalty and a 270A under-reporting penalty for the same year.
Is late ITR filing penalised under Section 271?
No longer. Late filing of the income tax return is now a fee under Section 234F, not a penalty under the old 271F — ₹5,000 in general, reduced to ₹1,000 where total income does not exceed ₹5,00,000. It is paid at the time of filing the belated return and is separate from the 270A under-reporting penalty.
If you would rather not do it yourself

Related TaxClue services

Income Tax Notice ReplyCA-drafted response to 270A/271 show-cause and demand notices.See the service →Income Tax Return FilingAccurate ITR reconciled with AIS/26AS to avoid under-reporting.See the service →TDS Return FilingFile TDS/TCS returns on time and fix 271H/234E defaults.See the service →Advance Tax PaymentPay advance tax on time to cut 234B/234C interest exposure.See the service →
TaxClue penalty & notice desk

Facing a Section 270A / 271 Penalty?

From replying to a show-cause notice and claiming Section 270AA immunity to clearing 271B and 271H defaults, TaxClue’s CA-led team handles it end to end — 100% online, across India.

Reply to a Penalty Notice → File Your Income Tax Return