Section 271GB of the Income-tax Act, 1961: Penalty for Failure to Furnish or for Furnishing an Inaccurate Report under Section 286
Section 271GB provides financial penalties where a reporting entity fails to furnish a required Country-by-Country Report (CbCR), does not produce information or documents requested by the prescribed authority, or furnishes inaccurate information in specified circumstances.
What is Section 286 reporting?
Section 286 of the Income-tax Act, 1961 establishes Country-by-Country Reporting obligations for qualifying international groups. A report provides jurisdiction-wise information about the group's revenue, profit or loss, income tax, employees, capital, accumulated earnings, tangible assets and constituent entities. It supports tax-risk assessment and international exchange of tax information.
A reporting entity is an entity required to furnish the CbCR under Section 286. Depending on the circumstances, this may include an Indian-resident parent entity, an alternate reporting entity or a qualifying Indian-resident constituent entity. The statutory revenue threshold, applicable reporting accounting year and relevant filing conditions must be checked before determining whether a report is due.
Under Form 3CEAD guidance, CbCR is submitted in Form 3CEAD, subject to Section 286 and Rule 10DB of the Income-tax Rules, 1962.
Penalty amounts under Section 271GB
| Provision | Nature of default | Penalty |
|---|---|---|
| 271GB(1)(a) | Failure to furnish the Section 286(2) report for a period not exceeding one month | Rs. 5,000 per day of continuing default |
| 271GB(1)(b) | Continuing failure beyond one month | Rs. 15,000 per day for the period beyond one month |
| 271GB(2) | Failure to produce information or documents within the period allowed under Section 286(6) | Rs. 5,000 per day from the day after the permitted period expires |
| 271GB(3) | Continued failure after service of an order directing penalty under subsection (1) or (2) | Rs. 50,000 per day from the date of service of the order, as specified by the provision |
| 271GB(4) | Specified cases of inaccurate reporting or inaccurate response to a Section 286(6) notice | Rs. 5,00,000 |
Explanation of each subsection
Section 271GB(1): Late or missing CbCR
Where an entity required to furnish the report under Section 286(2) does not do so, the prescribed authority may impose Rs. 5,000 for each day of default during the first month and Rs. 15,000 per day for the period beyond one month. The daily rates apply to the relevant portions of the continuing failure.
Section 271GB(2): Failure to provide requested documents
Section 286(6) allows the prescribed authority to request information and documents to verify a report's accuracy. The ordinary response period is 30 days from receipt of the notice, with a possible extension of up to 30 further days on application. If the entity does not comply within the allowed period, the penalty is Rs. 5,000 per day, starting on the following day.
Section 271GB(3): Default continuing after penalty order
Where a failure under subsection (1) or (2) continues after the entity has been served with a penalty order, subsection (3) provides an enhanced penalty of Rs. 50,000 per day for the continued failure, beginning from the date of service of that order. The overriding language of this subsection must be considered when calculating the penalty for the post-order period.
Section 271GB(4): Inaccurate information
A penalty of Rs. 5,00,000 may be directed where the reporting entity:
- knew that the report was inaccurate when filing it but failed to inform the prescribed authority;
- discovered an inaccuracy after filing but failed to inform the authority and furnish a corrected report within 15 days of discovery; or
- furnished inaccurate information or documents in response to a notice under Section 286(6).
The provision concerns the specified statutory circumstances, not an automatic penalty for every typographical mistake.
Illustrative calculation
Assume a required report remains unfiled for 40 days and, solely for illustration, the first-month period is taken as 30 days. The indicative amount under subsection (1) would be 30 × Rs. 5,000 plus 10 × Rs. 15,000, totaling Rs. 3,00,000. Actual computation depends on the relevant calendar dates, statutory period and any subsequent penalty order.
Reasonable cause and Section 273B
Section 273B of the Income-tax Act, 1961 provides that no penalty shall be imposable for a failure covered by Section 271GB where the person or assessee proves that there was reasonable cause for the failure. This is a fact-dependent statutory defence. Records of system outages, attempts to file, correspondence, and corrective action may be relevant, but do not automatically establish reasonable cause.
Practical compliance checklist
- Confirm whether the international group crosses the prescribed consolidated revenue threshold for the relevant accounting year.
- Identify the parent entity, alternate reporting entity and any Indian constituent entity with a filing obligation.
- Verify the applicable Form 3CEAD reporting deadline and any notification requirements under Section 286 and Rule 10DB.
- Maintain reliable jurisdiction-wise financial and constituent-entity records.
- Respond to notices within the permitted period and document any request for extension.
- Immediately report discovered inaccuracies and furnish a corrected report within the statutory 15-day window where applicable.