Penalty Provisions for Non-Filing and Incorrect Filing of TDS/TCS Statements : Clause 461 of the Income Tax Bill, 2025 Vs. Section 271H of the 1961 Act

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....e. The provision is intended to replace or update the existing penalty mechanism under section 271H of the Income-tax Act, 1961, which currently governs penalties for similar defaults. Understanding the nuances of Clause 461 and its relationship with Section 271H is essential for tax professionals, businesses, and other stakeholders, as it has practical implications for compliance, enforcement, and taxpayer rights. This commentary provides an in-depth analysis of Clause 461, examines its objectives, breaks down its provisions, discusses its practical implications, and conducts a comparative analysis with Section 271H of the 1961 Act. Objective and Purpose The legislative intent behind Clause 461 is to strengthen the compliance framework ....

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.... 397(3)(b) is critical, as it defines the nature and timing of the statements to be furnished, presumably relating to TDS/TCS transactions. 2. Quantum of Penalty The penalty for either default is discretionary and ranges from a minimum of Rs. 10,000 to a maximum of Rs. 1,00,000. The Assessing Officer is empowered to determine the appropriate penalty within this range, presumably taking into account the gravity and circumstances of the default. This quantum is identical to that prescribed u/s 271H, indicating continuity in the legislative approach towards the severity of the offense. 3. Relief from Penalty Clause 461(2) provides a significant exception to the imposition of penalty for delay or non-filing. No penalty shall be levied if t....

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....oes not preclude the application of other penalty or prosecution provisions that may be attracted in cases of willful default or fraud. Comparative Analysis with Section 271H of the Income-tax Act, 1961 1. Structural Parity Both Clause 461 and Section 271H address penalties for failure to furnish prescribed statements or for furnishing incorrect information therein. The core structure of both provisions is similar, reflecting a continuity in legislative approach. 2. Specific Provisions Compared Aspect Clause 461 of the Income Tax Bill, 2025 Section 271H of the Income-tax Act, 1961 Default Covered Failure to deliver statement u/s 397(3)(b) within time; or furnishing incorrect information in such statement. Failure to deliver ....

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....d the reporting obligations, whereas Section 271H is embedded in the existing Act. * Wording and Discretion: While both provisions use discretionary language ("may impose"/"may direct"), the precise procedural safeguards and guidelines for exercise of discretion may be further elaborated in the new Bill or accompanying rules. * Historical Amendments: Section 271H originally allowed a one-year grace period for penalty relief, which was reduced to one month with effect from 01-04-2025. Clause 461 incorporates the revised, stricter timeline ab initio. * Scope of Application: The scope of statements covered may differ, depending on the definitions and requirements under the respective sections (397(3)(b) versus 200(3)/206C(3)). 5. Policy....

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....rrective action in case of defaults. Organizations must invest in compliance infrastructure and timely monitoring of TDS/TCS obligations. * For Tax Professionals: Advising clients on the strict timelines and the importance of accurate information reporting becomes even more critical. Professional diligence in reviewing TDS/TCS statements is essential. * For Tax Authorities: The provision continues to provide a robust enforcement tool, while the discretionary relief mechanism helps in focusing enforcement on willful or serious defaults. Conclusion Clause 461 of the Income Tax Bill, 2025 largely mirrors the existing Section 271H of the Income-tax Act, 1961, with certain refinements reflecting policy evolution and administrative experien....