Section 271GA: Penalty for Failure to Furnish Information Under Section 285A

Section 271GA of the Income-tax Act, 1961 prescribes a penalty where an Indian concern fails to provide information or documents required under Section 285A in connection with certain offshore transfers involving Indian assets.

What Section 285A Requires

Section 285A applies where shares or interests in a foreign company or entity derive substantial value, directly or indirectly, from assets located in India, and the foreign company or entity holds those assets through or in an Indian concern. The Indian concern must furnish prescribed information and documents to the prescribed income-tax authority to assist determination of income deemed to accrue or arise in India under Section 9(1)(i).

In practical terms, the provision addresses reporting of offshore transactions that may change the ownership structure or control associated with Indian assets. Whether reporting is required depends on the statutory conditions and applicable rules, not merely on the existence of a foreign shareholder.

Penalty Under Section 271GA of the Income-tax Act, 1961

If an Indian concern required to furnish information or documents under Section 285A fails to do so, the prescribed income-tax authority may direct payment of the following penalty:

These are the two statutory categories. The 2% amount is calculated with reference to the relevant transaction value, not automatically the Indian concern's turnover or profits.

Reasonable Cause and Penalty Proceedings

Section 273B: No penalty under Section 271GA is imposable where the Indian concern proves that there was reasonable cause for the failure. Supporting documents and a clear chronology of events are important when relying on this protection.

Section 274: The opportunity-of-being-heard requirements for penalty proceedings should be considered before a penalty order is passed. The authority and the taxpayer should also examine the procedural and limitation provisions applicable to the relevant year.

Companies should maintain offshore transaction records, relevant ownership charts, valuation material, reporting submissions, acknowledgements and correspondence with the tax authority.

Illustrative Penalty Calculation

Suppose a reportable offshore transaction valued at Rs. 20 crore directly or indirectly transfers management or control of the Indian concern and the required Section 285A information is not furnished. The Section 271GA penalty amount would be Rs. 40 lakh (2% of Rs. 20 crore), subject to the applicable statutory requirements and any established reasonable-cause defence. If the default falls into the other statutory category, the prescribed penalty is Rs. 5 lakh.

Legislative Background and 2025 Act Transition

Section 271GA was inserted by the Finance Act, 2015 (Act 20 of 2015), section 74, with effect from 1 April 2016. Under the Income-tax Act, 2025, the corresponding penalty provision is identified as Section 458 in the Income Tax Department's statutory cross-reference navigator. The corresponding reporting provision and the applicable rules should be checked for post-transition compliance.

For earlier tax years, Sections 271GA, 285A, 273B and related provisions of the 1961 Act remain relevant as permitted by the repeal and savings framework. Do not assume that a section number under the 1961 Act applies unchanged to a tax year governed by the 2025 Act.

Official Law and Guidance

• Income Tax Department: Section 271GA (Income-tax Act, 1961)
• Income Tax Department: Penalties and prosecutions
• Income Tax Department: Income-tax Act, 2025 and comparison resources
• Income Tax Department: Transition to the new Act
• Official cross-reference navigator (1961 and 2025 provisions)

Last reviewed: 28 October 2026. This article is general legal information; the applicable law, rules and facts should be checked before filing or responding to a penalty notice.