Section 459 · Penalties
Section 459 of the Income-tax Act, 2025 — Penalty for Country-by-Country (CbC) Reporting Failures
By CA Rajat Agrawal
Updated 05 Jul 2026
Chapter XXI
📜 What the law says — Section 459, Income-tax Act 2025
459. (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 im-
posing 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).
Penalty for failure to submit statement under section 505.
In plain language
What Section 459 is about
Section 459 of the Income-tax Act, 2025 is the penalty provision that punishes failures connected with Country-by-Country (CbC) reporting by large multinational groups. It is the enforcement arm of Section 511 (which lays down the actual CbC filing obligation). In simple words: if a big multinational group operating in India does not file its CbC report on time, does not hand over information the tax officer asks for, or files a report with wrong numbers, Section 459 lets the tax department impose stiff daily penalties.
Under the old Income-tax Act, 1961 this was Section 271GB, and the reporting duty sat in Section 286. The 2025 Act simply renumbers them — the substance (rates, thresholds, conditions) has been carried forward largely unchanged.
Who does it apply to?
- Reporting entities of international groups — typically the Indian parent, an "alternate reporting entity", or an Indian constituent entity of a multinational group that meets the consolidated group-revenue threshold (broadly ₹6,400 crore in the preceding accounting year, tied to the OECD's EUR 750 million BEPS Action 13 limit).
- Not ordinary individual taxpayers. A salaried person, small business or ordinary company with no cross-border group has nothing to do with Section 459.
- It reaches the entity that was required to furnish the CbC report or the intimation/notification under Section 511, or to produce documents when the prescribed authority asks.
The four failures Section 459 penalises
- Failure to furnish the CbC report (sub-section 1): ₹5,000 per day while the failure continues, if the delay is up to one month; ₹15,000 per day if it drags beyond one month.
- Failure to produce information/documents when the authority calls for them (sub-section 2): ₹5,000 per day, counted from the day after the given period expires.
- Continued failure after a penalty order is served (sub-section 3): the penalty escalates sharply to ₹50,000 per day from the date the order is served, for as long as the default continues.
- Furnishing an inaccurate report (sub-section 4): a flat ₹5,00,000 penalty — but only in defined situations (see conditions below).
Key conditions and limits
- The ₹5 lakh inaccurate-report penalty is not automatic. It bites only where the entity (a) knew of the inaccuracy at the time of filing and did not inform the authority; (b) discovered the error later and failed to inform the authority and file a corrected report within 15 days of discovery; or (c) furnished wrong information in response to a notice under Section 511.
- The daily penalties keep running for every day the default continues — the meter does not stop just because a month has passed; it merely moves to the higher slab.
- Penalties are imposed by the prescribed authority under Section 511, and the entity gets a reasonable opportunity of being heard before any penalty is levied.
How it interacts with other sections
- Section 511 is the parent obligation — Section 459 has no life of its own without a Section 511 duty.
- It sits alongside other transfer-pricing documentation penalties (such as the master file / local file penalties) in the 2025 Act's penalty chapter, but Section 459 is specific to CbC-related defaults.
- Because these are procedural/reporting penalties, they can apply even where no additional tax is due — the trigger is the reporting failure itself, not tax evasion.
Practical implications
- Group tax teams should diarise the CbC filing due date well in advance — the daily-accrual design means even a short slip becomes expensive quickly.
- If an error is spotted after filing, correct it within 15 days and inform the authority — doing so is the safest route to avoid the ₹5 lakh charge.
- Once a penalty order is served, comply immediately: the ₹50,000-per-day post-order rate is designed to make prolonged non-compliance ruinous.
Note: exact figures should be confirmed against the bare Act and Finance Act 2026 amendments; the thresholds and rates above reflect the widely reported CbC framework carried into the 2025 Act.
💡 Example
Example 1 — Late CbC report. GlobalTech Group's Indian parent was required to furnish its CbC report by the due date but filed it 40 days late. For the first 30 days the penalty is ₹5,000 × 30 = ₹1,50,000. For the remaining 10 days (beyond one month) the higher slab applies: ₹15,000 × 10 = ₹1,50,000. Total penalty under Section 459(1) = ₹3,00,000 — for a purely procedural delay.
Example 2 — Inaccurate report not corrected. BharatManu Ltd, an Indian constituent entity, filed its CbC report but later discovered that revenue for one jurisdiction was materially overstated. It did nothing for 20 days. Because it failed to inform the prescribed authority and file a corrected report within the 15-day window, a flat penalty of ₹5,00,000 is attracted under Section 459(4) — regardless of the size of the error.
A short story. Meera, the tax controller of an Indian arm of a European auto group, treated the CbC report as "just a formality" and let it slide during a busy quarter-close. By the time she filed, five weeks had passed and the department also issued a notice asking for backup documents she couldn't locate for another week. The daily penalties under sub-sections (1) and (2) stacked up to several lakh rupees. The lesson she took away: for CbC compliance the calendar is unforgiving — a reminder set two months early would have cost nothing, but casual delay cost the group real money.
| Default (sub-section) | Penalty rate | When it applies |
|---|
| Failure to furnish CbC report — 459(1) | ₹5,000 per day | If period of failure does not exceed one month |
| Failure to furnish CbC report — 459(1) | ₹15,000 per day | For the period of failure beyond one month |
| Failure to produce information/documents — 459(2) | ₹5,000 per day | From the day after the allowed period expires |
| Continued failure after penalty order served — 459(3) | ₹50,000 per day | From the date the penalty order is served, until compliance |
| Furnishing inaccurate report — 459(4) | ₹5,00,000 (flat) | Knew of error / didn't correct within 15 days / wrong reply to notice |
Related sections
Section 511 — Country-by-Country report and CbC reporting obligation Section 271GB (1961 Act) — Predecessor penalty for CbC failures Section 286 (1961 Act) — Predecessor CbC reporting requirement Section 273B (1961 Act equivalent) — No penalty where reasonable cause is shown Section 92D — Maintenance and furnishing of transfer-pricing documentation / master file Section 274 (equivalent) — Procedure: opportunity of being heard before penalty
Frequently asked questions
What does Section 459 of the Income-tax Act 2025 deal with?
It imposes penalties for failures relating to Country-by-Country (CbC) reporting under Section 511 — namely failing to file the CbC report, failing to produce information when asked, continuing the default after a penalty order, or furnishing an inaccurate report. It is the 2025 Act successor to Section 271GB of the 1961 Act.
Who has to worry about Section 459?
Only reporting entities of large multinational groups — typically the Indian parent, an alternate reporting entity, or an Indian constituent entity — where the group's consolidated revenue crosses the CbC threshold (broadly ₹6,400 crore). Ordinary individuals and purely domestic businesses are not affected.
How much is the penalty for filing the CbC report late?
₹5,000 for every day the failure continues if the delay is up to one month, and ₹15,000 for every day for the period beyond one month. The penalty keeps accruing daily until the report is filed.
When does the ₹5,00,000 inaccurate-report penalty apply?
It applies where the entity knew of the inaccuracy at filing and did not inform the authority, or discovered the error later and failed to inform and file a corrected report within 15 days, or gave wrong information in reply to a notice. If none of these apply, this flat penalty is not attracted.
What is the 15-day rule under Section 459?
If you discover after filing that your CbC report contains inaccurate information, you must inform the prescribed authority and furnish a corrected report within 15 days of discovery. Doing so protects you from the ₹5 lakh penalty under sub-section (4).
Can the penalty be avoided if there was a genuine reason for the delay?
The Income-tax Act generally allows relief where the taxpayer proves a reasonable cause for the failure, and the entity must be given an opportunity of being heard before any penalty is levied. You should raise any genuine cause during the penalty proceedings.
Which old section does Section 459 replace?
Section 459 of the 2025 Act corresponds to Section 271GB of the Income-tax Act, 1961, and it enforces the CbC reporting duty that was earlier in Section 286 (now Section 511 of the 2025 Act).
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 05 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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