Section 271GB of Income Tax Act 1961
Section 271GB provides penalties where a reporting entity fails to furnish the Country by Country Report required under section 286, fails to produce information or documents when called for, continues the default after a penalty order, or furnishes inaccurate information in specified circumstances.
Section 271GB(1) - Failure to Furnish Report under Section 286(2)
Where a reporting entity required to furnish the report referred to in section 286(2) for a reporting accounting year fails to do so, the prescribed authority may impose a daily penalty.
| Period of failure | Penalty |
|---|---|
| Failure not exceeding one month | Rs. 5,000 for every day during which the failure continues |
| Failure continuing beyond one month | Rs. 15,000 for every day during which the failure continues beyond one month |
Section 271GB(2) - Failure to Produce Information or Documents
If a reporting entity fails to produce information and documents within the period allowed under section 286(6), the prescribed authority may impose a penalty of Rs. 5,000 for every day during which the failure continues. The period begins from the day immediately following the day on which the allowed period for furnishing the information and documents expires.
Section 271GB(3) - Continuing Default after Penalty Order
If a failure covered by section 271GB(1) or section 271GB(2) continues after an order directing payment of penalty has been served on the entity, the prescribed authority may impose a penalty of Rs. 50,000 for every day for which the failure continues, beginning from the date of service of that order.
Section 271GB(4) - Inaccurate Information
A penalty of Rs. 5,00,000 may be imposed where a reporting entity provides inaccurate information in the report furnished under section 286(2) and:
| Situation | Relevant default |
|---|---|
| Known inaccuracy | The entity knows of the inaccuracy when furnishing the report but fails to inform the prescribed authority. |
| Inaccuracy discovered later | The entity discovers the inaccuracy after furnishing the report but fails to inform the prescribed authority and furnish a correct report within 15 days of discovery. |
| Response to notice | The entity furnishes inaccurate information or documents in response to a notice issued under section 286(6). |
What is Section 286?
Section 286 contains the reporting framework for international groups. In specified cases, a parent entity or alternate reporting entity resident in India is required to furnish a report for the reporting accounting year containing prescribed information about the international group. The framework also contains notification and information-production requirements for constituent entities and reporting entities.
The Country by Country Report is furnished in the prescribed form and manner. The current electronic filing framework uses Form 3CEAD for the CbCR. Applicability, monetary thresholds, due dates and reporting responsibilities should be checked for the relevant reporting accounting year under section 286 and the Income-tax Rules, 1962.
Meaning of International Group and Reporting Entity
For section 286, an international group is broadly a group that includes two or more enterprises resident in different countries or territories, or includes an enterprise resident in one country or territory and subject to tax through a permanent establishment in another. A reporting entity is the entity that bears the statutory obligation to furnish the report under section 286(2), subject to the detailed rules governing parent entities, alternate reporting entities and constituent entities.
Reasonable Cause under Section 273B
Section 271GB is covered by section 273B. Accordingly, no penalty is imposable for a failure covered by section 271GB if the person proves that there was reasonable cause for the failure. This protection is fact-specific and should be supported by contemporaneous records and evidence.
Penalty Summary
| Default | Penalty |
|---|---|
| Failure to furnish section 286(2) report, up to one month | Rs. 5,000 per day |
| Failure continuing beyond one month | Rs. 15,000 per day beyond one month |
| Failure to produce information or documents under section 286(6) | Rs. 5,000 per day |
| Default continuing after service of penalty order | Rs. 50,000 per day from service of the order |
| Specified inaccurate reporting | Rs. 5,00,000 |
Official Resources
Income Tax Department - Section 271GB
Income Tax Department - Form 3CEAD Country by Country Report