Chapter XIX - Offences and penalties
Section 126
Section 126: General disciplines related to penalty
This section gives safeguards for discretionary penalties, including proportionality, hearing and treatment of minor or easily corrected mistakes.
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This article is for general information. Refer to the Central Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) No officer under this Act shall impose any penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross negligence.
Explanation.––For the purpose of this sub-section,–– (a) a breach shall be considered a ‘minor breach’ if the amount of tax involved is less than five thousand rupees; (b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of record.
(2) The penalty imposed under this Act shall depend on the facts and circumstances of each case and shall be commensurate with the degree and severity of the breach.
(3) No penalty shall be imposed on any person without giving him an opportunity of being heard.
(4) The officer under this Act shall while imposing penalty in an order for a breach of any law, regulation or procedural requirement, specify the nature of the breach and the applicable law, regulation or procedure under which the amount of penalty for the breach has been specified.
(5) When a person voluntarily discloses to an officer under this Act the circumstances of a breach of the tax law, regulation or procedural requirement prior to the discovery of the breach by the officer under this Act, the proper officer may consider this fact as a mitigating factor when quantifying a penalty for that person.
(6) The provisions of this section shall not apply in such cases where the penalty specified under this Act is either a fixed sum or expressed as a fixed percentage.
Key takeaways
Minor breaches
No penalty is to be imposed for minor tax-regulation or procedural breaches, especially easily rectifiable documentation errors without fraud or gross negligence.
Hearing and proportionality
The penalty must reflect the breach and no person may be penalised without an opportunity of hearing.
Scope limit
These disciplines do not apply where the Act specifies a fixed sum or fixed percentage penalty.
Minor breaches
No penalty is to be imposed for minor tax-regulation or procedural breaches, especially easily rectifiable documentation errors without fraud or gross negligence.
Hearing and proportionality
The penalty must reflect the breach and no person may be penalised without an opportunity of hearing.
Scope limit
These disciplines do not apply where the Act specifies a fixed sum or fixed percentage penalty.
Practical checklist
Do
- Identify whether the breach is minor and an error apparent on the record.
- Record any early voluntary disclosure as a potential mitigating factor.
- Check whether the penalty is fixed or discretionary.
Frequently asked questions
Does section 126 govern every penalty?
No. Subsection (6) excludes penalties expressed as a fixed sum or fixed percentage.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026