Penalties vary significantly depending on whether the case involves bona fide errors (Section 73) or intentional fraud/suppression (Section 74).
Penalties vary significantly depending on whether the case involves bona fide errors (Section 73) or intentional fraud/suppression (Section 74).
Section 73 applies when tax was unpaid due to a genuine mistake, no fraud involved: the demand can be settled at 10% penalty if you pay before the notice. Section 74 is for fraud or deliberate suppression and carries 100% penalty, but even under 74, if you pay before the SCN is issued you pay zero penalty.
The key is responding quickly once you get a notice, because the penalty percentage goes up at each stage. Check the notice header carefully as it will mention which section is being invoked.
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