Penalty for under-reporting and misreporting of income - Section 270A

Penalty for under-reporting of income: substantial tax-based penalties apply where income is under-reported or misreported.

Penalty liability attaches where a taxpayer under-reports or misreports income; under-reported income is quantified by differences between assessed, reassessed or return-determined income and specified benchmarks, with special aggregation rules when deemed income under MAT/AMT applies. Certain documented explanations, correct estimations, disclosed lower estimates, compliant transfer pricing additions, and amounts subject to separate search penalties are excluded. Penalty rates are fixed as proportions of tax on under-reported income, increased where defined misreporting acts occur, and tax on under-reporting is computed according to prescribed formulas for different assessment situations.