Section 271CA of ITA, 1961 : Section 271Ca: Penalty For Failure To Collect Tax At Source

Explanation using Example

Imagine a scenario where ABC Pvt. Ltd. is a company that provides consultancy services and is required to collect tax at source (TCS) on certain transactions as per Chapter XVII - BB of the Income-tax Act, 1961. However, due to an oversight in their accounting department, they fail to collect TCS on a transaction worth INR 10,00,000. According to Section 271CA, ABC Pvt. Ltd. would face a penalty equal to the amount of tax they failed to collect, which in this case would be calculated based on the applicable TCS rate for the transaction. This penalty would be imposed by the Joint Commissioner of Income Tax.