September 21, 2023
income tax penalty in india

How and when a person is penalized as per Income Tax Act?

A penalty is a kind of punishment given for infringing a law. In the context of income tax, one shall be penalized if one fails to comply with the laws mentioned in the Income Tax Act,1961. The itr fine can either be a fixed amount or a percentage of a certain amount. Here are the popular errors that are made by persons and their corresponding penalties mentioned under the income tax act. 

Penalty for Concealment/Hiding of income or furnishing incorrect amount of income:

 The income tax is imposed on the total income earned by a person in a particular year. This income is aggregate in nature and includes the amount earned from all sources like salaries, rent, capital gains, etc. Admitting this, it is usually seen that people cover their income from the assessing officer or give improper details of income in order to pay less income tax. This is punishable under section 270a of income tax act.

The Tax Penalty in these cases is either of the two mentioned below.

  •  100% of the tax which was sought to be evaded by the person.
  •  300% of the tax which was sought to be evaded by the person.

Penalty for Default in Making Payment of Tax:

 The income tax penalty payable by a person depends on the relevant rate of the applicable slab. These slab rates depend on the sum total of income earned in a financial year. Currently, the slab rates are as follows:

Total Income Earned in a FY. Applicable tax rate.
Up to Rs. 250000NIL
Rs.250001- Rs.5000005%
Rs.500001- Rs.75000010%
Rs.750001- Rs.100000015%
Rs.1000001- Rs.125000020%
Rs. 1250001- Rs.150000025%
Rs.1500000 and Above30%

Any default on the part of the taxpayer to pay tax as per the appropriate rate draws a tax penalty of an amount which shall be decided by the assessing officer. This amount shall not be greater than the amount of tax in arrears.

ITR Filing Made Easy
With LegalSalah

Penalty for late filing of itr: 

The gross income earned by an individual is required to be disclosed to the tax department in certain forms after every financial year before a specified date of the assessment year. These methods are collectively called the Income Tax Return or ITR.

Taxpayers must pay penalties for delay in filing ITR, as per a recent ruling under Section 234F of Income Tax Act. In simple words, if you fail to file your tax returns within the deadline of 31st July, you would possibly find yourself paying up to INR 10,000 as penalties.

Penalty for Failing to Deduct TDS: 

TDS or tax deducted at source is a concept whereby a person/organization making certain payments to another person is required to deduct tax at the time of making such payment. This is done, as long as the payment to be made exceeds a threshold, and therefore the deductor holds a TAN (Tax Deduction and Collection Number). Some examples of TDS are:

  •  Tax Deducted during paying salaries to employees.
  •  Tax Deducted during crediting interest earned on Fixed deposits.
  •  Tax Deducted while making payments of prizes won during a lottery, crosswords, etc.

This deducted amount is in turn submitted with the government after deduction.TDS return late filing fee is equivalent to the tax that failed to deduct.

Penalty for faking entries in books of accounts: 

The financial transactions of a business are entered in the accounts maintained. These books are essential for calculating income tax. It is also equally important to supply original and authentic accounts to the tax authorities. Any forged entry, falsified document, omitted entry, or documents assigned by an unauthorized person, if detected by the income tax officer, is guilty under the income tax act. The penalty in such cases shall be equivalent to the amount of such fake or omitted entry.

The income tax is used for taking gradual steps towards the development of the nation. Therefore, it is the responsibility of every responsible citizen to pay taxes honestly. Relevant changes in laws such as e-filing of income tax returns have promoted the seamless payment of income tax by assessees. File your tax return conveniently and on time to avoid late filing fees for income tax return.


Leave a Reply

Your email address will not be published. Required fields are marked *