Income-tax Act, 1961 | Penalty proceedings

Section 275 of Income-tax Act, 1961: Limitation Period for Imposing Penalties

Section 275 prescribes the deadline for passing penalty orders under Chapter XXI. The Finance Act, 2025 substantially replaced its time-limit framework with a uniform six-month period measured from the end of the relevant quarter, effective 1 April 2025.

Important transition: For tax years beginning before 1 April 2026, proceedings, including penalty proceedings, remain governed by the Income-tax Act, 1961 under section 536(2)(c) of the Income-tax Act, 2025. The date and law applicable to a particular penalty proceeding must be checked before calculating its limitation.

What does section 275 mean?

A limitation period is the statutory time within which an authority must pass a penalty order. An order passed beyond the applicable statutory deadline may be challenged as time-barred. The trigger date depends on whether the underlying order is appealed, revised, or neither.

Section 275(1): Six months from the end of the relevant quarter

Under the substituted section 275(1), effective from 1 April 2025, a penalty order under Chapter XXI must generally be passed within six months after the end of the quarter containing the relevant event.

Situation	Event that starts the calculation
No appeal under sections 246, 246A or 253	Completion of the proceedings during which penalty action was initiated
Revision under section 263 or 264	Date the revision order is passed
First appeal under section 246 or 246A, without further Tribunal appeal	Receipt of the appellate order by the jurisdictional Principal Commissioner or Commissioner
Appeal before the Appellate Tribunal under section 253	Receipt of the Tribunal order by the jurisdictional Principal Commissioner or Commissioner
Any other case	Date the notice for imposition of penalty is issued

Quarter means one of the calendar quarters ending 31 March, 30 June, 30 September or 31 December. The six-month period runs from the end of that quarter, not directly from the triggering date.

Illustrative calculation

If the applicable triggering event occurs on 15 May 2025, its quarter ends on 30 June 2025. Six months from that quarter-end ordinarily ends on 31 December 2025, subject to statutory exclusions, applicable transitional rules and any relevant legal developments.

Section 275(2): Penalty adjustment after appeal or revision

Where a penalty decision has already been made before the outcome of an appeal or revision, section 275(2) permits an appropriate order imposing, enhancing, reducing or cancelling the penalty, or dropping the proceedings, to give effect to the revised assessment. The prescribed time limit is generally six months from the end of the quarter in which the relevant appellate order is received or revision order is passed. The assessee must be heard or given a reasonable opportunity of being heard.

Section 275(3) and (4): Procedural safeguards

Section 275 also preserves transitional treatment for older penalty actions and applies the prior-approval requirement of section 274(2), where relevant, to orders under section 275(2). These provisions should be read with the exact statutory version applicable to the case.

Section 275(5): Excluded periods

In computing the limitation period, the substituted law excludes specified periods, including the time taken to provide a rehearing under the proviso to section 129 and the period of a court-ordered stay on penalty proceedings, calculated in accordance with the statutory wording. These exclusions can change the final deadline.

Earlier law applicable before 1 April 2025

Before the Finance Act, 2025 substitution, section 275 used different limitation formulas for appeals, revisions and other cases. Some involved the end of the financial year, six months from the end of a month, or one year from the end of a financial year. For proceedings governed by that earlier framework, the correct version of the provision and relevant case law must be examined rather than automatically applying the newer quarter-based rule.

Historical section 275(1A) addressed modification of penalty orders after appellate or revisional decisions. The older text also contained an explanation excluding specified periods, including certain rehearing and stay periods.

Practical checklist for taxpayers

Identify the precise penalty provision and the assessment or tax year.
Check whether the relevant order was appealed or revised, and obtain the dates of receipt by the jurisdictional authority where relevant.
Determine which version of section 275 governs the proceeding.
Calculate the deadline using the correct quarter or historical time-limit rule.
Account for any statutory exclusions or court stays and preserve documentary evidence.
Check that the penalty notice, hearing opportunity and any necessary approval comply with section 274.

Income-tax Act, 2025: Important numbering distinction

The Income-tax Act, 2025 came into force on 1 April 2026. Its section 275 concerns reference to the Dispute Resolution Panel, not limitation for imposing penalties. Do not assume that a section number in the 1961 Act carries the same subject in the 2025 Act. Section 536 of the new Act preserves the application of the 1961 Act to relevant earlier tax-year proceedings.

Official legal references

Frequently asked questions

Is the deadline always six months after a penalty notice?

No. The applicable triggering event differs by case. A penalty notice is the trigger under the residual category, not every category.

Does an appeal affect the penalty limitation period?

Yes. Where the assessment or other order is under appeal, the relevant appellate outcome and its receipt by the specified authority may determine the trigger.

Can a court stay extend the limitation period?

Yes. The statutory period attributable to a qualifying court stay is excluded from the computation as provided in section 275(5).

This article is general legal information. Exact limitation dates depend on the applicable statutory version, procedural history, exclusions and judicial interpretation. Updated 28 October 2026.