“Check new Income Tax slabs and ITR due dates for FY 2025-26 (AY 2026-27). Get full list of deadlines, extensions, tax rates, and penalties explained clearly.
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NEW DELHI: The Income Tax Act prescribes various penalties and prosecutions for non-compliance, ranging from late filing of returns to willful tax evasion.
Understanding penalties and prosecutions under the Income Tax Act is crucial for taxpayers in India. Non-compliance can attract monetary fines, penalties, or even imprisonment. This guide provides a consolidated overview of various penalties and prosecutions applicable for Assessment Year (AY) 2026-27.
ITR Filing Due Dates AY 2025-26 (FY 2024-25)
- Individuals/HUFs/AOPs/BOIs (no audit): September 15, 2025
- Businesses & professionals (audit required): October 31, 2025
- Transfer Pricing audit (Form 3CEB): November 30, 2025
- Belated return (with penalty): December 31, 2025
Penalties for missing September 15 deadline:
- Income ≤ Rs 5 lakh → Rs 1,000
- Income > Rs 5 lakh → Rs 5,000 (u/s 234F)
- An additional 1% monthly interest (u/s 234A) on unpaid tax.
- Losses cannot be carried forward.
Extension chances: Low, as over 4 crore ITRs have already been filed by September 1, 2025, and the government expects filings to cross 7 crore before the deadline.
ALSO READ: BREAKING | New Income Tax Bill 2025 Withdrawn: Centre in Lok Sabha
The Union Budget 2025 introduced major relaxations under the new tax regime, reducing tax liability for most taxpayers.
- New Regime Highlights:
- Basic exemption limit raised to Rs 4 lakh (from Rs 3 lakh).
- Income up to Rs 12 lakh is tax-free due to an enhanced rebate of Rs 60,000.
- 30% tax rate now applies only above Rs 24 lakh (earlier Rs 15 lakh).
- Standard deduction of Rs 75,000 available.
- Limited deductions allowed, but NPS contribution and home loan interest on let-out property remain.
- Old Regime:
- Slabs unchanged.
- More deductions/exemptions available (80C, 80D, HRA, LTA, etc.).
- Senior and super senior citizens continue to enjoy higher exemption limits.
- Other Changes:
- TDS thresholds relaxed.
- Surcharge capped at 25% under new regime (vs. 37% in old).
- Rebate not applicable to special income (capital gains, crypto, gaming).
- Which is Better?
- New regime: Beneficial for middle-income earners and those with fewer deductions.
- Old regime: Beneficial if deductions exceed break-even limits (around Rs 4.5–8 lakh depending on income).
Bottom Line:
For FY 2025-26, most middle-class taxpayers benefit from the new regime, while high-income earners with large deductions may still prefer the old regime.
Penalties under the Income Tax Act [AY 2026-27]
| Section | Nature of Default | Penalty Levied |
|---|---|---|
| 140A(3) | Failure to pay self-assessment tax/interest/fee | As imposed by the Assessing Officer (AO), not exceeding the tax in arrears |
| 158BFA(2) | Undisclosed income during block period | 50% of tax on undisclosed income |
| 221(1) | Default in making payment of tax | As imposed by AO, not exceeding tax in arrears |
| 234E | Late filing statements | Rs. 200 per day, capped at tax deductible/collectible |
| 234F | Late filing of income tax return | Rs. 5,000 (or Rs. 1,000 if income ≤ Rs. 5 Lakh) |
| 234G | Default in submission of statements/certificates under sections 35/80G | Rs. 200 per day |
| 234H | Late intimation of Aadhaar | Rs. 500–1,000 depending on time of submission |
| 270A | Under-reporting/misreporting of income | 50%–200% of tax on under-reported income |
| 271A | Failure to maintain books as per section 44AA | Rs. 25,000 |
| 271AA/271AAA/271AAB/271AAC | Search-related penalties for undisclosed income | 10%–60% of undisclosed income depending on circumstances |
| 271AAD | False or omitted entries in books | 100% of affected entries |
| 271B | Failure to get accounts audited | 0.5% of turnover or Rs. 1,50,000, whichever is less |
| 271C | Failure to deduct/pay TDS or TCS | Amount of tax not deducted/collected |
| 271DA | Receipt of cash > Rs. 2 Lakh | Amount received |
| 271GB | Failure to furnish transfer pricing/reporting info | Rs. 5,000–50,000 per day depending on duration |
| 272A/272B/272BB | Non-compliance with PAN, Aadhaar, TDS/TCS reporting | Rs. 500–10,000 per default |
Offences and Prosecutions
| Section | Nature of Offence | Punishment | Fine |
|---|---|---|---|
| 275A / 275B | Contravention during search and seizure, denial of inspection | Up to 2 years | No limit |
| 276 / 276A / 276B | Removal, concealment, failure to comply with provisions | 6 months – 7 years | No limit |
| 276C / 276CC | Willful attempt to evade tax | 3 months – 7 years depending on amount | No limit |
| 277 / 277A | False statements, falsification of books | 3 months – 7 years | No limit |
| 278 / 278A | Abetment or repeat offences | 3 months – 7 years | No limit |
| 280(1) | Disclosure of particulars by public servant against law | Up to 6 months | No limit |
Click Here to Read Previous Reports on Budget 2025
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