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How to calculate penalty for inaccurate particulars of income
if income is loss but penalty initiated for inaccurate particulars of income against addition than how to calculate penalty
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| Penalty for inaccurate particulars of income is levied under Section 270A of the IT Act (applicable from AY 2017-18 onwards, replacing Section 271). Here is the calculation method: 1. Section 270A – Under-Reporting vs Misreporting: a) Under-Reporting of Income: Tax payable on under-reported income × 50%. - Under-reported income = Assessed income minus Income returned (or income assessed earlier). b) Misreporting of Income (more serious): Tax payable on misreported income × 200%. - Misreporting includes: furnishing false/fabricated evidence, recording false entry in books, suppression of facts, claiming bogus deductions, failure to report international transaction under Sec 92E. 2. Tax on Under-Reported Income: Compute tax at applicable rates on the under-reported income portion and apply 50% (or 200% for misreporting) on that tax amount. 3. Example: - Total assessed income: Rs. 20 lakh - Income returned: Rs. 15 lakh - Under-reported income: Rs. 5 lakh - Tax on Rs. 5 lakh (at applicable slab rate, say 20%): Rs. 1 lakh - Penalty u/s 270A (under-reporting): 50% × Rs. 1 lakh = Rs. 50,000 4. Immunity: Section 270AA provides immunity from penalty if the assessee pays tax and interest within the time specified and does not appeal against the assessment — applicable only for under-reporting (not misreporting). 5. Old Provision (Sec 271): For pre-AY 2017-18 cases, penalty under Section 271(1)(c) is 100% to 300% of tax on concealed income. |
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