An Indian exporter fails to maintain the required transfer-pricing documentation for an international transaction worth ₹5 crore with its overseas parent. What penalty may be imposed under section…
Question and options
An Indian exporter fails to maintain the required transfer-pricing documentation for an international transaction worth ₹5 crore with its overseas parent. What penalty may be imposed under section 442(1)(a) for this transaction?
₹1.50 lakh
₹15 lakh
₹10 lakh
₹25 lakh
Answer and explanation
Section 442(1)(a) of the Income-tax Act, 2025 allows a penalty of 2% of the value of each international transaction for which the information and documents required by section 171(1) are not kept, so 2% of ₹5 crore is ₹10 lakh. The fixed ₹5 lakh penalty in section 442(2) is for failure to furnish the information and documents required under section 171(4), a different default.
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