Income Tax Penalties — Section 270A, 271, 271B, 271H Guide 2025-26 | TaxClue

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

Updated: 3 June 2026

The primary penalty section for most taxpayers from AY 2017-18 onwards is Section 270A (which replaced Section 271(1)(c)). Under-reporting income attracts a penalty of 50% of tax on the under-reported income. Misreporting — deliberate concealment or falsification — attracts 200% of tax. The older Section 271(1)(c) still applies for AY 2016-17 and earlier. Separate penalty sections cover audit defaults (271B), TDS filing defaults (271H), and late ITR filing (234F). Penalties are levied over and above the tax and interest due.

200%

Maximum penalty under Section 270A for deliberate misreporting of income. Under-reporting (genuine mistakes or differences of opinion) attracts only 50% — and immunity is available under Section 270AA by paying tax + interest promptly.

Section 270A — Under-Reporting vs Misreporting (AY 2017-18 Onwards)

Under-reporting means income assessed is higher than income returned. It includes omissions, arithmetical errors, disallowance of deductions — where no deliberate intent is established. Penalty: 50% of tax attributable to the under-reported income.

Misreporting is a higher offence — it requires deliberate action: false entries, fraudulent claims, suppression of evidence, manipulation of accounts, or claim of fictitious losses. Penalty: 200% of tax on the misreported amount.

All Key Income Tax Penalty Sections at a Glance

Section	Violation	Penalty Rate	Maximum / Cap
270A	Under-reporting income (AY 2017-18+)	50% of tax on under-reported income	No upper cap
270A (misreporting)	Misreporting / deliberate concealment	200% of tax on misreported income	No upper cap
271(1)(c)	Concealment of income (pre AY 2017-18)	100% to 300% of tax sought to be evaded	300% of tax evaded
271B	Failure to get accounts audited (tax audit)	0.5% of turnover / gross receipts	₹1,50,000
271H	Failure to file TDS / TCS return in time	₹10,000 per default	₹1,00,000
234F	Late filing of ITR (formerly 271F)	₹5,000 (₹1,000 if income ≤ ₹5L)	₹5,000
271AA	Failure to maintain / furnish transfer pricing docs	2% of the value of transaction	No upper cap

Immunity from Penalty — Section 270AA

Section 270AA provides a path to immunity from Section 270A penalty and Section 276C prosecution:

Condition	Detail
Pay tax + interest demanded	Must be paid within 30 days of the demand notice under Section 156
File application for immunity	Apply in prescribed form within the time period specified
No appeal filed	Taxpayer must not have filed or must withdraw any appeal against the assessment
Not applicable for misreporting	Immunity available only for under-reporting — deliberate misreporting is excluded

Frequently Asked Questions

How can I avoid a penalty under Section 270A for under-reporting income?

Section 270A allows the taxpayer to avoid the penalty — or get it reduced to 50% — if the under-reporting is not deliberate. File your return accurately and disclose all income, including income reported in AIS/Form 26AS. If you receive a notice, respond promptly with supporting documents. For genuine mistakes or differences in interpretation of law, a written explanation to the Assessing Officer detailing the bona fide reasons may convince the AO to drop the penalty. A Voluntary Disclosure Scheme (if announced by CBDT) or a settlement under the Vivad se Vishwas scheme can also offer immunity from penalties.

What is the difference between a penalty under Section 270A and prosecution under Section 276C?

Penalty under Section 270A is a monetary fine — 50% of tax on under-reported income (200% for misreporting). Prosecution under Section 276C is a criminal proceeding that can lead to imprisonment of up to 7 years for willful attempts to evade tax. Prosecution is initiated in addition to (not instead of) penalty and is reserved for serious, deliberate fraud. The AO must refer the case to the Principal Commissioner/Commissioner before initiating prosecution. Penalty can be paid to settle the matter; prosecution requires facing criminal courts.

Does Section 270A apply to AY 2016-17 and earlier assessment years?

No. Section 270A was inserted by the Finance Act 2016 and applies from Assessment Year 2017-18 onwards. For AY 2016-17 and earlier, the older Section 271(1)(c) applies — which levied a penalty of 100% to 300% of tax sought to be evaded on concealed income. For assessments initiated after 1 April 2017 (even if relating to older years in some situations), the AO must specify whether the charge is under 270A or 271(1)(c).

Is penalty under Section 271B and 271H in addition to the regular tax?

Yes. Penalties under Section 271B (failure to get tax audit) and Section 271H (failure to file TDS return) are levied over and above the regular tax, interest, and any other penalties applicable. Section 271B penalty is 0.5% of total sales/turnover or ₹1.5 lakh, whichever is lower. Section 271H penalty ranges from ₹10,000 to ₹1,00,000 for failure to file TDS/TCS return. These are separate and cumulative with other outstanding tax dues.

Can I get immunity from a Section 270A penalty by paying tax and interest?

Yes — partially. If you pay the tax and interest demanded within the time specified in the show-cause notice, and before the penalty order is passed, the penalty under Section 270A may be waived in cases of under-reporting (not misreporting). Section 270AA provides immunity from penalty and prosecution if the assessee pays the assessed tax and interest within 30 days of receipt of the demand notice and the under-reporting is not based on misreporting. This immunity is not available for cases involving deliberate misreporting.

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