Penalties in connection with transfer pricing regulations

TP documentation and Accountant’s report:

Clause Default Nature of penalty
270A Under-reporting or misreporting of income A sum equal to 50% of the amount of tax payable on under-reported income; or
A sum equal to 200% of the amount of tax payable on under-reported income where under-reported income is in consequence of any misreporting
271AA(1) Failure to maintain TP documentation, failure to report the transaction, maintenance or furnishing of incorrect information/document 2% of the value of each International Transaction/ SDT
271G Failure to furnish documents/ report transaction 2% of the value of the International Transaction/ SDT
271BA Failure to furnish accountant’s report INR 100,000

Master file and CbCR

Default Nature of penalty
Furnishing of details pertaining to master file
Failure to furnish the master file by prescribed date INR 500,000
Failure to respond within 30 days to master file related queries 2% of the value of international transaction(s)
Furnishing of details pertaining to CbCR
Furnishing inaccurate particulars in the CbCR (subject to certain conditions) INR 500,000

Under reporting of income shall not include an amount represented by a transfer pricing adjustment where the assessee has declared the international transaction under Chapter X, maintained information and documents as prescribed under section 92D and disclosed all the material facts relating to the transaction