Many times common man don’t know the repercussions of misreporting of income and or tax under the Income Tax Act, 1961. Our minds are still running in the era of “everything would get manage, so don’t worry.” And they still try to hide the income and wants to pay lower tax or no tax. Such kind of people always search loophole into the system.
However, nowadays everything is getting digital, technology sound and interlinked. And therefore, finding such loopholes into the system is getting difficult. So instead of doing such kind of means to evade the taxes, it is always better to have clean records and keep away yourself from penalties and or any charges.
We will discuss few of the consequences of misreporting, non-reporting and or other mistakes:-
- Providing incorrect PAN:-
If someone provide incorrect PAN then Penalty of Rs.10,000/- would be attracted u/s 272B of the Income Tax Act,1961.
- Cash Transaction:-
Penalty would be 100% of the amount received in cash u/s 271DA of the Income Tax Act,1961, if a single cash transaction is more than Rs.2 lakh.
- Filing of Tax Return late:-
A sum of Rs.5,000/- would be leviable u/s 234F of the Income Tax Act,1961, if tax Return not filed by due date.
- TDS on purchase of Property not deducted:-
Interest is 1% for every month of delay u/s 201 of the Income Tax Act, 1961, if TDS not deducted on purchase of property worth Rs.50 lakh.
- TDS not deposited:-
If one deducted TDS but not deposited with the Government authority then sum calculated @1.5.% per month from the date of deduction would be charged as interest u/s 201(1A).
- Charges for late payment:-
Interest of 1% will be charged every month u/s 234B of the Income Tax Act,1961, if tax liability is more than Rs.10,000 and if tax is not paid or short paid in advance.
- Concealment of Income:-
If evaded amount exceeds Rs.25 lakh then penalty ranges between 100% and 300% of tax evaded u/s 271(1)(c) of the Income Tax Act,1961.
- Audit of Accounts:-
If one is liable to audit of accounts but failed to do so, then penalty would be leviable u/s 271B of the Income Tax Act,1961 as follows:-
Highest of the 3’s
1. 5% of Total Sales or
2. 5% of Gross receipts or
3. 1,50,000/-
For easy of reference find below herewith Penalties in a Tabular Form
| Default | Description | Relevant Section | Amt. (Rs.) |
| Providing incorrect PAN | If someone provide incorrect PAN | 272B | 10,000.00 |
| Cash Transaction | If a single cash transaction is more than Rs.2 lakh | 271DA | 100% of the amount received in cash |
| Filing of Tax Return Late | If tax Return not filed by due date | 234F | 5,000.00 |
| TDS on purchase of Property not deducted | If TDS not deducted on purchase of property worth Rs.50 lakh | 201 | Interest @1% for every month of delay |
| TDS not deposited | If one deducted TDS but not deposited with the Government authority | 201(1A) | 1.5.% per month from the date of deduction would be charged as interest |
| Charges for late payment | If tax liability is more than Rs.10,000 & if tax is not paid or short paid in advance | 234B | Interest of 1% will be charged every month |
| Concealment of Income | If evaded amount exceeds Rs.25 lakh | 271(1)(c) | Between 100% and 300% of tax evaded |
| Audit of Accounts | If one is liable to audit of accounts but failed to do so | 271B | Highest of the 3’s
a) 0.5% of Total Sales or b) 0.5% of Gross receipts or c) Rs.1,50,000/- |
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