Common Penalties for Income Tax Defaults

Penalties for Income Tax Defaults

Income tax non-compliance would seem like a mine-field with several hefty fines and penalties having been introduced this financial year and the next. Misdemeanours in relation to income tax payments or filing of returns could prove very costly to your household budget were they to be implemented in letter and spirit.

Common Penalties for Income Tax Defaults

For example, the commonest mistake one meets in our experience is failing to file the annual return. There seems to be a general lack of awareness that firm concerned. It is not enough that TDS gets deducted from your salary or interest income. Filing a return isn’t as hard as you might think.

Penalties for Common Income Tax Mistakes

    1. If you fail to declare your taxes before the due date (usually, 31 July of every financial year) as per the requirements of Section 139 you are liable to penalties as well as interest on penalty at the rate of 15% per annum starting from the date following the last date for compliance.
      A new Section 234F was accordingly inserted. It states that if a person must furnish a return under Section 139 but does not do so by the due date, he would have to pay a sum of Rupees 5000 as fine for submissions on or before 31 December of the same year or Rupees 10,000 in every other case. Those earning less than Rupees 5 lakh in a year, however, do not need to pay more than Rupees 1000 by way of penalty for delayed filing of ITR.
    1. Section 206AA makes it mandatory to furnish the correct PAN at the time of either paying TDS or filing returns. Should you make a mistake here, the law says that you are liable to be deducted tax on income at a slab rate of 20%.
    1. Compare your TDS certificate (Form 16) with Form 26AS. While the former is supplied by your employer as proof of tax paid on income, the latter can be viewed once you login or register at the income tax e-filing portal. Ideally there should be no discrepancies between the two but a circular dated October 11, 2017 took note of the fact that since the income stated in an ITR form is at net value it is not possible to compare and match Form 16 and Form 26AS. So, at the moment there are no penalties or notices being issued for this situation.
    1. Concealment of income to avoid tax is taken quite seriously by the tax authorities. According to Section 271, if you are guilty you may have to pay up to three times the amount of tax that was due upon completion of assessment.
  1. If you understate or mis-report your income, Section 270A(1) says that you could have to shell out 50% more of the tax dues made upon you.

Common Penalties for Income Tax Defaults

Any default in making payment of taxes under Section 221(1) allows the Assessing Officer a virtual free hand in deciding the amount of the fine to be imposed.

You don’t have to be clued in to all the arcane jargon used to make taxes deliberately hard to understand. You can take the help of tax experts to personalize tax solutions for you at AllindiaITR. The website is owned and operated by Corwhite Solutions Private Limited.


  1. interesting and well documented blog furnishing all the penalties regarding income tax defaults.
    keep it up all india itr

  2. Great wrk IRT. Now I know diffent panalties of not filling taxes. This is really helpfull for me. It is easy to underatand and it is structure and display beautifully so it is easy to underatand.Thnx for this this really help me alot.This blog is really helpfull for us to know more about ITR. This tell us everything that we should know about ITR. This is like a algorithm to fill taxes becaute it tell us step by step how we should fill taxes and yes it is also easy to understand. It tell breifly and accurately about taxes. The best thing about this blog is that we can get every information hear only. we shoud not go on different side to search about itr. Great work keep it up.

  3. Hi there, I was really looking for a detailed idea about penalties regarding Income Tax defaults.I was really confused.Now all my doubts are cleared. Thanks a lot,

    Sir you keep making blogs like this

  5. After reading this whole article now I well know about all common penalties for income defaulters, Mainly most of the people didn’t know about all this common mistakes and fall for the penalties and challans, but now on I well know all about this mistakes and prevent myself from this types of penalties, thank you again for this information

  6. Good work ITR now i know what are the penalties that i or someone else can face. It is a very well documented blog and a very well written one too and it helps one to understand very easy to understand. This has helped me to know more about ITR. This blog helps me to understand things step by step and avoids further confusion that may occur as i am able to understand it in a great manner. Many people dont know about the mistakes they might be committing while filling ITR but this blog helps them to file ITR without any difficulty.


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