The Income tax Act 1961, has prescribed penal provisions for default in compliance with the provisions of the a TP regulations, which are summarized below:

Nature of default Relevant Section of the Act Nature of penalty
Under Reporting of income arising in the cases other than the case referred in sub section (9) 270A(2) read with sub-section (6) 50% of the tax payable on under reported income
Under reporting of income in consequence of misreporting of income – this includes failure to report any international transaction(s) or SDT(s) to which the provisions of Chapter X apply 270A sub-sections (8) & (9) 200% of the tax payable on the under reported income
Failure to maintain TP documentation as prescribed in Section 92D of the Act read with Rule 10D of the Rules or report any international transaction(s) or maintains or furnishes incorrect information or documents 271AA 2% of the value of the international transaction(s) [or SDTs] for which documentation is not maintained or transaction is not reported
Failure to furnish TP documentation to the TP Officer, during the course of TP audit 271G 2% of the value of the international transaction [or SDTs] for which documentation is not furnished
Failure to furnish accountant’s report (Form 3CEB) 271BA INR 100,000

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