Chapter XXI - Penalties
Section 459
Section 459: penalty for failure to furnish report or for furnishing inaccurate report under Section 511
Section 459 sets out a tiered set of penalties for a "reporting entity" under section 511 (the report referred to is the country-by-country type report for a reporting accounting year) - covering outright failure to file the report, failure to produce supporting information, continued default even after a penalty order, and furnishing inaccurate information.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) If any reporting entity referred to in section 511, required to furnish the report referred to in sub-section (2) of the said section, for a reporting accounting year, fails to do so, the prescribed authority under that section may impose on such entity, a penalty of—
(a) ₹5000 for every day for which the failure continues, if the period of failure does not exceed one month;
(b) ₹15000 for every day for which the failure continues beyond the period of one month.
(2) If any reporting entity referred to in section 511 fails to produce the information and documents within the period allowed under sub-section (7) of the said section, the prescribed authority under that section may impose on such entity, a penalty of ₹5000 for every day during which the failure continues, beginning from the day immediately following the day on which the period for furnishing the information and document expires.
(3) If the failure referred to in sub-section (1) or (2) continues after an order imposing a penalty under the said sub-section, has been served on the entity, then, irrespective of the provisions of the said sub-sections, the prescribed authority may impose penalty of fifty thousand rupees for every day for which such failure continues beginning from the date of service of such order.
(4) If a reporting entity referred to in section 511 provides inaccurate information in the report furnished under sub-section (2) of the said section, the prescribed authority under that section may impose on such entity, a penalty of ₹500000, if—
(a) the entity has knowledge of the inaccuracy at the time of furnishing the report but fails to inform the prescribed authority; or
(b) the entity discovers the inaccuracy after the report is furnished and fails to inform the prescribed authority and furnish correct report within fifteen days of such discovery; or
(c) the entity furnishes inaccurate information or document in response to the notice issued under section 511(7).
Introduction
Section 459 sets separate penalties for a section 511 reporting entity that misses its report or supporting-document duty, continues in default after a penalty order, or submits inaccurate report information. The applicable amount depends on the precise failure and its duration.
Key takeaways
Late international-group report
A section 511 reporting entity may face a daily penalty whose rate rises after the first month of continuing failure.
Documents after notice
Failure to produce requested information under section 511(7) has a separate daily penalty.
Inaccurate reporting
Specified knowing or uncorrected inaccuracies can attract a separate ₹5,00,000 penalty.
Failure to furnish the section 511 report
Sub-section (1): if a reporting entity under section 511, required to furnish the report referred to in section 511(2) for a reporting accounting year, fails to do so, the prescribed authority may impose a penalty of (a) ₹5,000 for every day of failure, if the failure period does not exceed one month; or (b) ₹15,000 for every day of failure beyond that one-month period.
| Duration of failure | Daily penalty |
|---|---|
| Up to one month | ₹5,000 per day |
| Beyond one month | ₹15,000 per day |
Failure to produce information and documents
Sub-section (2): if a reporting entity under section 511 fails to produce information and documents within the period allowed under section 511(7), the prescribed authority may impose a penalty of ₹5,000 for every day the failure continues, starting the day after that period expires.
Continued failure after a penalty order
Sub-section (3): if the failure under sub-section (1) or (2) continues even after a penalty order for that failure has been served on the entity, the prescribed authority may - regardless of the sub-section (1)/(2) rates - impose a steeper penalty of ₹50,000 for every day the failure continues from the date the order was served.
Furnishing inaccurate information in the report
Sub-section (4): if a reporting entity provides inaccurate information in the report furnished under section 511(2), the prescribed authority may impose a penalty of ₹5,00,000, if any of the following applies:
- The entity knew of the inaccuracy when furnishing the report but failed to inform the prescribed authority
- The entity discovers the inaccuracy after furnishing the report but fails to inform the prescribed authority and furnish a correct report within 15 days of discovery
- The entity furnishes inaccurate information or documents in response to a notice issued under section 511(7)
Step-by-step flow for applying Section 459
- 1
Is the entity a reporting entity referred to in section 511?
- No: Section 459 does not apply.
- Yes: Go to the next step.
- 2
Did it fail to furnish the report under section 511(2) for a reporting accounting year?
Under Section 459(1), the prescribed authority may impose ₹5,000 for every day if the failure does not exceed one month, and ₹15,000 for every day the failure continues beyond one month.
- Yes: Apply Section 459(1), then go to the next step.
- No: Go to the next step.
- 3
Did it fail to produce information and documents within the period allowed under section 511(7)?
Under Section 459(2), the penalty is ₹5,000 for every day, from the day after that period expires.
- 4
Did a failure under Section 459(1) or (2) continue after a penalty order was served?
- Yes: Under Section 459(3), the authority may impose ₹50,000 for every day from the date of service of the order, irrespective of Section 459(1) and (2). Then go to the next step.
- No: Go to the next step.
- 5
Was inaccurate information provided in the report?
Section 459(4) allows ₹5,00,000 if the entity knew of it when furnishing and did not inform the authority, discovered it later and did not inform and furnish a correct report within fifteen days, or furnished inaccurate information or documents in reply to a notice under section 511(7).
Practical checklist
Do
- Identify whether the issue is a missing section 511 report, non-production of requested information, continued failure after service of a penalty order, or inaccurate information. Each has its own statutory conditions.
- Keep the filing deadline, request deadline, order-service date and discovery date for an inaccuracy in a dated record. Check the applicable daily period or inaccurate-information condition separately.
Avoid
- Do not treat the ₹50,000 daily rate as starting only on the day after service: subsection (3) starts it from the date of service of the order.
Illustrative example
Worked example: a report filed 50 days late
Hypothetical facts (illustration only, not a real taxpayer): A parent entity resident in India must furnish its report under section 511(2). It furnishes it 50 days late. The first month of the failure is assumed to be 30 days, so 20 days fall beyond one month. Later it discovers an error in the report, informs the authority and furnishes a correct report within ten days of discovery. All day counts are assumed for illustration.
First month
Reading Section 459(1) as a tiered rate: 30 × ₹5,000 = ₹1,50,000.
Beyond one month
20 × ₹15,000 = ₹3,00,000.
Total under Section 459(1)
₹1,50,000 + ₹3,00,000 = ₹4,50,000.
Inaccuracy
It informed the authority and furnished a correct report within fifteen days of discovery, so none of the conditions in Section 459(4) is met and the ₹5,00,000 penalty does not arise.
Outcome
- Possible penalty under Section 459(1): ₹4,50,000.
- If the default had continued after a penalty order was served, Section 459(3) would allow ₹50,000 a day from the date of service.
Frequently asked questions
What is the penalty for a reporting entity that never files its Section 511 report?
₹5,000 per day for the first month of failure, rising to ₹15,000 per day for any failure beyond one month, under section 459(1).
What happens if the entity still doesn't comply after a penalty has already been imposed?
Section 459(3) permits ₹50,000 for every day the specified failure continues, beginning from the date of service of the penalty order, overriding the subsection (1) or (2) rates.
Is there a separate penalty for furnishing an inaccurate report rather than not filing at all?
Yes - section 459(4) sets a penalty of ₹5,00,000 for furnishing inaccurate information in specific circumstances, such as knowing about the inaccuracy and not informing the authority, or not correcting it within 15 days of discovery.
Need help applying this provision to your situation?
Get help with country-by-country and reporting entity complianceLast updated 10 October 2026