Amendment proposed in the provisions in S. 272A of the Income Tax Act, vide Clause 78 of the Finance Bill 2022 (budget 2022-23), to enhance penalty from Rs. 100 per day to Rs. 500 per day, to act as adequate deterrence against non-compliance:
1. Section 272A of the Act provides for penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections etc. At present, the amount of penalty for failures listed under sub-section (2) of section 272A is one hundred rupees for every day during which the failure continues.
2. Section 272A ensures compliance with various obligations under the Income tax Act by penalising non-compliance and acting as a deterrent.
3. However, the penalty of one hundred rupees had been commented upon by the CAG in their report on the entertainment sector as being too low. The penalty had not been increased since the section was introduced in 1999 and does not have an adequate deterrence value.
4. Therefore, it is proposed to increase the amount of penalty for failures listed under sub-section (2) of section 272A to five hundred rupees from the existing sum of one hundred rupees.
5. This amendments will take effect from 1st April, 2022.