Section 458
Section 458: penalty for failure to furnish information or document under Section 506
Section 458 applies to an Indian concern that is required to furnish information or documents under section 506 (relevant to indirect-transfer type transactions involving the Indian concern) but fails to do so - the penalty rate depends on whether the underlying transaction transferred management or control of the Indian concern.
What Section 458 says
"If any Indian concern, which is required to furnish any information or document under section 506, fails to do so, the prescribed income-tax authority under the said section, may direct that such Indian concern shall pay by way of penalty, a sum of-- (a) 2% of the value of the transaction in respect of which such failure has taken place, if such transaction had the effect of directly or indirectly transferring the right of management or control in relation to the Indian concern; (b) ₹5,00,000, in any other case."
How the penalty rate is decided
| Nature of the transaction | Penalty |
|---|---|
| Transaction had the effect of directly or indirectly transferring the right of management or control in the Indian concern | 2% of the value of that transaction |
| Any other case | ₹5,00,000 |
Frequently asked questions
Who does Section 458 apply to?
An Indian concern that is required to furnish information or documents under section 506 and fails to do so.
What decides whether the penalty is 2% of transaction value or a flat ₹5,00,000?
Whether the transaction in question had the effect of directly or indirectly transferring the right of management or control in relation to the Indian concern - if so, the penalty is 2% of the transaction's value; otherwise, it is a flat ₹5,00,000.
Related sections
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