Income Tax Penalties 2025: New Section Numbers
- Sections 270A and 271 spread across 439 to 470 under the Income Tax Act 2025. Penalty amounts unchanged.
- Under-reporting: 50% of tax on the under-reported income.
- Misreporting: 200% of tax, plus possible prosecution if intent to evade is proved.
- Section 234F late filing fee continues: Up to Rs 5,000 for missing the return deadline.
Income tax penalties can be severe - from 50% of tax on under-reported income to 200% for misreporting. Under the Income Tax Act 2025, Sections 270A and 271 are now covered under Sections 439 to 470. The penalty amounts and triggers remain largely the same, but knowing the new section numbers is important when responding to notices.
Key Penalty Section Mappings
Under-Reporting Penalty - 50% of Tax
Under Section 439 (old 270A), if the income tax department finds that you have under-reported your income, the penalty is 50% of the tax payable on the under-reported amount.
Under-reporting happens when:
- Income assessed by the department is higher than income declared in your return
- You failed to report any income that was taxable
- You claimed deductions or exemptions you were not entitled to
Misreporting Penalty - 200% of Tax
If the under-reporting is due to misreporting of income, the penalty jumps to 200% of the tax payable. Misreporting includes:
- Misrepresentation or suppression of facts
- Recording false entries in books of accounts
- Claiming expenses based on false evidence
- Recording a false deduction claim
- Failure to record investments in books
Late Filing Fee
Under Section 441 (old 234F), if you file your income tax return after the due date:
- Rs 5,000 if the return is filed after the due date but before December 31
- Rs 1,000 if your total income is below Rs 5 lakh
This late fee is in addition to any interest payable under Sections 234A, 234B, and 234C for delayed payment of tax.
Penalty for Not Deducting TDS
Under Section 444 (old 271C), if a person who is required to deduct TDS fails to do so, the penalty is equal to the amount of TDS that should have been deducted. Additionally:
- Interest at 1% per month for failure to deduct TDS
- Interest at 1.5% per month for deducting but not depositing TDS
- Prosecution is possible for repeated or willful defaults
Prosecution Provisions - Sections 455-470
For serious tax offences, criminal prosecution can be initiated:
- Tax evasion above Rs 25 lakh: imprisonment of 6 months to 7 years
- Failure to file return (tax due above Rs 25 lakh): imprisonment of 6 months to 7 years
- Failure to deduct/deposit TDS: imprisonment of 3 months to 7 years
- False statement in verification: imprisonment of 6 months to 7 years
Immunity Provisions
The new act continues to provide immunity from prosecution in certain cases:
- Voluntary disclosure: if you come forward and pay the due tax with interest before the department discovers the default
- Settlement commission: immunity may be granted as part of a settlement order
- First-time offenders: the department may exercise discretion for minor, first-time defaults
How to Respond to a Penalty Notice
If you receive a penalty notice, you should:
- Read the notice carefully - identify which section the penalty is proposed under
- Respond within the deadline mentioned in the notice (usually 30 days)
- Submit a written reply with supporting documents explaining your position
- Consult a Chartered Accountant - penalty proceedings require professional handling
- Appeal if the penalty is confirmed - you can appeal to CIT(Appeals) and further to ITAT
If you missed reporting income, file a revised or updated return and pay the tax with interest BEFORE the department issues a notice. Immunity from prosecution and lower penalties typically apply to voluntary corrections.
Frequently Asked Questions
What is the penalty for under-reporting income?
The penalty for under-reporting income is 50% of the tax payable on the under-reported amount, under Section 439 (old Section 270A). If the under-reporting involves misreporting of facts, the penalty increases to 200% of the tax payable.
What is the late filing fee for income tax returns?
The late filing fee is Rs 5,000 under Section 441 (old Section 234F) if the return is filed after the due date. If your total income is below Rs 5 lakh, the fee is reduced to Rs 1,000.
Can I go to jail for not paying income tax?
Prosecution is possible for serious tax offences like tax evasion above Rs 25 lakh or willful failure to file returns. Imprisonment ranges from 6 months to 7 years. Prosecution is typically reserved for serious and repeated offenders, not for genuine mistakes.
What is the new section number for penalty provisions?
Main penalty sections: Section 439 (under-reporting / misreporting, old 270A), Section 441 (late filing fee, old 234F), Section 443 (failure to get tax audit, old 271B), Section 444 (failure to deduct TDS, old 271C). Prosecution provisions are in Sections 455-470.
For the notices that PRECEDE penalty proceedings, see income tax notices under the new Act. For the late filing fee (Section 441) timing, see ITR filing deadlines 2026.
Disclaimer: This article provides general information about the Income Tax Act 2025 and is not tax advice. Consult a qualified Chartered Accountant for advice specific to your situation.
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