Section 271GB of ITA, 1961 : Section 271Gb: Penalty For Failure To Furnish Report Or For Furnishing Inaccurate Report Under Section 286

Explanation using Example

Imagine a multinational corporation, GlobalTech Inc., operates in multiple countries including India. As per Section 286 of the Income-tax Act, 1961, GlobalTech is required to furnish a Country-by-Country report (CbCR) for its reporting accounting year by a specified due date. However, GlobalTech fails to submit the report on time.

Under Section 271GB, if GlobalTech does not submit the report within the due date, the Indian tax authorities (prescribed authority) can impose a penalty on GlobalTech. The penalty would be:

• If the delay is within one month of the due date, a penalty of INR 5,000 for each day of delay.
• If the delay extends beyond one month, the penalty would increase to INR 15,000 for each day of continued delay.

For example, if GlobalTech delays the filing by 45 days, the penalty would be (30 days x INR 5,000) + (15 days x INR 15,000) = INR 3,75,000.

Furthermore, if GlobalTech continues to fail in providing the report after an order imposing the initial penalty has been served, the penalty escalates to INR 50,000 for each day of ongoing failure post the service of the order.

In another scenario, if GlobalTech submits the report but it contains inaccurate information, and GlobalTech:

• Knew about the inaccuracy but didn't inform the authority,
• Found out later but did not correct the report within 15 days, or
• Provided inaccurate information during subsequent compliance after a notice,

then, the tax authorities can impose a penalty of INR 5 lakh on GlobalTech for the inaccurate reporting.