Faceless Penalty Scheme, 2021


Quick Summary
The Ministry of Finance has introduced the Faceless Penalty Scheme, 2021, under the Income-tax Act, 1961. This scheme aims to streamline the penalty process by removing the need for physical appearances. It defines key terms and establishes the framework for its implementation, coming into effect upon its publication in the Official Gazette.

MINISTRY OF FINANCE 
(Department of Revenue) 
(CENTRAL BOARD OF DIRECT TAXES) 
NOTIFICATION 
New Delhi, the 12th January, 2021 
(INCOME-TAX)

S.O. 117(E).—In exercise of the powers conferred by sub-section (2A) of section 274 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely:__

1. Short title and commencement.––(1) This Scheme may be called the Faceless Penalty Scheme, 2021. (2) It shall come into force on the date of its publication in the Official Gazette.

2. Definitions .–– (1) In this Scheme, unless the context otherwise requires, ––

(i) “Act” means the Income-tax Act, 1961 (43 of 1961);

(ii) “addressee” shall have the same meaning as assigned to it in clause (b) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

(iii) “assessment unit” means the assessment unit set up under the scheme notified under sub-section (3A) of section 143 of the Act or referred to in section 144B of the Act, as the case may be;

(iv) “authorised representative” shall have the same meaning as assigned to it in sub-section (2) of section 288 of the Act;

(v) “automated allocation system” means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources;

(vi) “Board” means the Central Board of Direct Taxes constituted under the Central Board of Revenues Act, 1963 (54 of 1963);

(vii) “computer resource” shall have the same meaning as assigned to it in clause (k) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

(viii) “computer system” shall have the same meaning as assigned to it in clause (l) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

(ix) “computer resource of assessee” shall include assessee’s registered account in designated portal of the Income-tax Department, the Mobile App linked to the registered mobile number of the assessee, or the registered email address of the assessee with his email service provider;

(x) “digital signature” shall have the same meaning as assigned to it in clause (p) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

To know more in details,click here

FAQ :

The Faceless Penalty Scheme, 2021 is a scheme introduced by the Central Government under the Income-tax Act, 1961, to manage penalty proceedings without the need for physical appearances.

The scheme came into force on the date of its publication in the Official Gazette.

The 'Act' referred to in the scheme means the Income-tax Act, 1961 (43 of 1961).

An assessment unit is the unit set up under the scheme notified under sub-section (3A) of section 143 of the Act or referred to in section 144B of the Act.

An automated allocation system is an algorithm that uses technology, including artificial intelligence and machine learning, for the randomised allocation of cases to optimise resource use.

 



Notification posted by

Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

Comments



CCI Pro





Company
15 September 2026
Client-site CA associate

Aditya Muley and Co

Mumbai

CA

View Details
Company
16 September 2026
Internal Audit - Team Lead

Consulting & Beyond

Chennai

CA

View Details
Company
19 September 2026
Finance Manager

Mugdha Art Studio

Hyderabad

CA

View Details
Company
ARTICLESHIP 16 September 2026
Article Assistant

MANUJ SHARMA AND COMPANY

Noida

CA Inter

View Details
Company
07 October 2026
Senior Account Manager

Amplio Invest

Mumbai

M.Com

View Details
Company
12 October 2026
AUDIT , ACCOUNTS AND TAXATION

KDSS

New Delhi

B.Com

View Details
Company
Featured ARTICLESHIP 06 October 2026
Semi Qualified

AJAY SINGH AND CO LLP

Thane

CA Final

View Details
Company
ARTICLESHIP 07 October 2026
Article Assistant

Malhotra Rajesh & Associates

New Delhi

B.Com

View Details