Section 271G of the Income-tax Act, 1961: Penalty for Failure to Furnish Documents under Section 92D
Section 271G provides for a penalty equal to 2% of the value of the relevant international transaction or specified domestic transaction for each failure to furnish information or documents required under Section 92D(3).
1. What does Section 271G provide?
Where a person has entered into an international transaction or specified domestic transaction and fails to furnish information or documents required under Section 92D(3), the Assessing Officer, Transfer Pricing Officer referred to in Section 92CA, or Commissioner (Appeals) may direct payment of a penalty equal to 2% of the value of the relevant transaction for each such failure. The provision was inserted by the Finance Act, 2001 with effect from 1 April 2002; specified domestic transactions were added with effect from 1 April 2013; and the Transfer Pricing Officer's penalty power was added with effect from 1 October 2014.
2. Meaning of the related legal provisions
Section 92D: Maintenance and furnishing of information
Section 92D governs prescribed information and documents relating to international transactions and specified domestic transactions. Under subsection (3), the tax authority may require their production during proceedings. Rule 10D of the Income-tax Rules, 1962 specifies relevant records, including ownership and group structure, business descriptions, transaction terms, functional and risk analysis, comparability studies and transfer pricing method selection, as applicable.
Section 92B: International transaction
An international transaction broadly involves associated enterprises, either or both of which are non-residents, and includes specified cross-border dealings such as purchase, sale or lease of property, provision of services, lending or borrowing, and other covered transactions, subject to the statutory definition and deeming provisions.
Section 92BA: Specified domestic transaction
Section 92BA identifies certain qualifying domestic transactions for transfer pricing purposes, subject to the applicable monetary threshold and statutory conditions. The category is distinct from international transactions.
Section 92CA: Transfer Pricing Officer
Section 92CA deals with reference to the Transfer Pricing Officer for determination of the arm's length price in applicable cases.
3. Deadline for producing documents
Under Section 92D(3), the taxpayer ordinarily has 10 days from receipt of the notice to furnish the required information or documents. The authority may extend the period by up to 30 additional days on an application by the taxpayer. The notice and any extension order should be retained as evidence of the applicable deadline.
4. How is the penalty calculated?
| Particulars | Illustration |
|---|---|
| Value of relevant transaction | Rs. 1,00,00,000 |
| Statutory penalty rate | 2% for each failure |
| Illustrative penalty for one failure | Rs. 2,00,000 |
| Two separately established failures | Potentially Rs. 4,00,000, subject to the law and facts |
Illustration only. The transaction value attributable to a particular default, the number of legally sustainable failures, and the circumstances of the notice require case-specific examination.
5. Distinction from related transfer pricing penalties
| Provision | Nature of non-compliance | Consequence |
|---|---|---|
| Section 271AA | Specified failures to maintain or report prescribed transfer pricing information | Generally 2% of relevant transaction value for covered defaults |
| Section 271BA | Failure to furnish accountant's report under Section 92E | Rs. 1,00,000 |
| Section 271G | Failure to furnish documents required under Section 92D(3) | 2% of relevant transaction value for each failure |
6. Relief under Section 273B and procedural safeguards
Section 273B expressly includes Section 271G. No penalty is imposable if the person proves that there was reasonable cause for the relevant failure. Whether a reason is sufficient depends on the evidence and circumstances; the relief is not automatic.
Section 274 ordinarily requires an opportunity of being heard before a penalty order is made. A taxpayer should respond to the specific notice, supply available records, explain any shortfall, and document the grounds for reasonable cause.
7. Practical compliance checklist
- Identify all covered international transactions and specified domestic transactions.
- Maintain records prescribed by Section 92D and Rule 10D, as applicable.
- Record the date of receipt of any Section 92D(3) notice.
- Provide complete, indexed documents within the applicable deadline.
- Apply for an extension promptly where necessary, preserving written confirmation.
- Retain submission acknowledgements, correspondence and evidence supporting any reasonable cause.
8. Frequently asked questions
Is the Section 271G penalty a fixed amount?
No. It is calculated at 2% of the value of the relevant international or specified domestic transaction for each failure.
Can the penalty be avoided for reasonable cause?
Yes, if reasonable cause is proved within Section 273B. The merits depend on the particular facts and supporting evidence.
Is failure to maintain records the same as failure to furnish them?
No. Section 271AA addresses certain documentation defaults, whereas Section 271G specifically addresses failure to furnish documents under Section 92D(3).
9. Official legal references
- Income Tax Department: Section 271G
- Income Tax Department: Section 273B
- Income Tax Department: Transfer Pricing Guidance
- Income Tax Department: Penalties and Prosecutions
Updated: 28 October 2026. This article describes Section 271G of the Income-tax Act, 1961 and related rules. For transactions and proceedings affected by the Income-tax Act, 2025, confirm the applicable tax year, commencement and transitional provisions before relying on section numbering.