Penalty and Prosecution for failure to deduct tax at source [ Section 271C and section 276B] - Income Tax - Ready Reckoner - Income Tax

Penalty for failure to deduct tax at source [ Section 271C ] Penalty under Section 271C shall be imposed for the following defaults: a. deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B (i.e. Section 192 to 206B); or b. Failure to pay dividend distribution tax Section 115O(2) ; c. Failure to pay or ensure payment of tax in respect of the winnings in kind, whether wholly or partly, where cash part is not sufficient to meet the liability for deduction of tax in respect of whole winnings as referred to in proviso to Section 194B ; d. Failure to ensure payment of tax in respect of the winnings from online game in kind, whether wholly or partly, where cash part is not sufficient to meet the liability for deduction of tax in respect of whole winnings from online games as referred to in Section 194BA(2) ; e. Failure to ensure payment of tax in respect of the benefit or perquisite in kind, whether wholly or partly, where cash part is not sufficient to meet the liability for deduction of tax in respect of whole of such benefit or perquisite as referred to in first proviso to Section 194R(1) ; f. Failure to ensure payment of tax in respect of the consideration for transfer of virtual digital asset (VDA) in kind, whether wholly or partly, where cash part is not sufficient to meet the liability for deduction of tax in respect of such consideration for the transfer of VDA as referred to in proviso to Section 194S(1) . [ Section 271C(1) ] Penalty Amount Such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay or ensure payment of, as aforesaid. [ Section 271C(1) ] Penalty Imposed by Any penalty imposable shall be imposed by the Joint Commissioner. [ Section 271C(2) ] Prosecution [ Section 276B ] If a person fails to pay to the credit of the Central Government, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine. Guidelines for Compounding of any Offences under the Income-Tax Act, 1961.