Section 271GA — Failure to Furnish Information or Document under Section 285A (Indirect Transfer of Indian Assets)
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live but narrow. Penalty on an Indian concern that fails to furnish the information or document required under section 285A in respect of an indirect transfer of assets situated in India (the Vodafone-type "look-through" reporting). The penalty is 2% of the value of the transaction where it had the effect of directly or indirectly transferring the right of management/control in the Indian concern, and Rs. 5,00,000 in any other case.
Finance Act, 2026: No amendment by the Finance Act, 2026.
Mechanism: An Indian concern fails to furnish the section 285A information/document on an indirect transfer → penalty of 2% of the transaction value (where management/control of the Indian concern is transferred) or Rs. 5,00,000 (otherwise).
Litigation profile: No meaningful direct litigation; the provision is specialised and applies to a small set of indirect-transfer cases.
A. COMMENTARY
Reporting the indirect transfer
Section 285A (with section 9(1)(i) Explanations 5-7) implements the post-Vodafone regime for taxing indirect transfers of Indian assets, requiring the Indian concern whose shares/interest derive substantial value from Indian assets to report the offshore transfer. Section 271GA penalises default in that reporting, with a value-linked penalty where management/control changes hands and a fixed penalty otherwise.
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; Finance Act, 2026 changes are noted above.
Penalty for failure to furnish information or document under section 285A.
271GA. If any Indian concern, which is required to furnish any information or document under section
285A, fails to do so, the income-tax authority, as may be prescribed under the said section, may direct that
such Indian concern shall pay, by way of penalty,—
(i) a sum equal to two per cent 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;
(ii) a sum of five hundred thousand rupees in any other case.
C. AUTHORITIES
No direct authority of note exists; the candour rule applies. The provision is governed by the section 285A/section 9 indirect-transfer scheme.
1. Specialised reporting default
Principle — two-tier penalty keyed to management/control
Proposition The 2%-of-value penalty applies where the indirect transfer carries the right of management/control of the Indian concern; otherwise the fixed Rs. 5,00,000 penalty applies.
Use Fixes the quantum according to the nature of the indirect transfer.
Prepared for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the official Act; case-law holdings are the author’s summaries for professional use.
CHAPTER XXI — PENALTIES IMPOSABLE
Section 271GA — Failure to Furnish Information or Document under Section 285A (Indirect Transfer of Indian Assets)
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live but narrow. Penalty on an Indian concern that fails to furnish the information or document required under section 285A in respect of an indirect transfer of assets situated in India (the Vodafone-type "look-through" reporting). The penalty is 2% of the value of the transaction where it had the effect of directly or indirectly transferring the right of management/control in the Indian concern, and Rs. 5,00,000 in any other case.
Finance Act, 2026: No amendment by the Finance Act, 2026.
Mechanism: An Indian concern fails to furnish the section 285A information/document on an indirect transfer → penalty of 2% of the transaction value (where management/control of the Indian concern is transferred) or Rs. 5,00,000 (otherwise).
Litigation profile: No meaningful direct litigation; the provision is specialised and applies to a small set of indirect-transfer cases.
A. COMMENTARY
Reporting the indirect transfer
Section 285A (with section 9(1)(i) Explanations 5-7) implements the post-Vodafone regime for taxing indirect transfers of Indian assets, requiring the Indian concern whose shares/interest derive substantial value from Indian assets to report the offshore transfer. Section 271GA penalises default in that reporting, with a value-linked penalty where management/control changes hands and a fixed penalty otherwise.
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; Finance Act, 2026 changes are noted above.
Penalty for failure to furnish information or document under section 285A.
271GA. If any Indian concern, which is required to furnish any information or document under section
285A, fails to do so, the income-tax authority, as may be prescribed under the said section, may direct that
such Indian concern shall pay, by way of penalty,—
(i) a sum equal to two per cent 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;
(ii) a sum of five hundred thousand rupees in any other case.
C. AUTHORITIES
No direct authority of note exists; the candour rule applies. The provision is governed by the section 285A/section 9 indirect-transfer scheme.
1. Specialised reporting default
Principle — two-tier penalty keyed to management/control
Proposition The 2%-of-value penalty applies where the indirect transfer carries the right of management/control of the Indian concern; otherwise the fixed Rs. 5,00,000 penalty applies.
Use Fixes the quantum according to the nature of the indirect transfer.
Prepared for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the official Act; case-law holdings are the author’s summaries for professional use.