ITR mistakes: When does the income tax penalty rise to 200% and how does it differ from late fees?

The Income Tax Department has clarified that income tax return (ITR) errors do not automatically attract a 200% penalty. Under the Income-tax Act, 2025, under-reporting can attract a penalty of 50% of the tax payable on the under-reported income, while misreporting can attract 200%.

Late fees and interest are charged separately. Late fees are Rs 5,000 for returns filed after the due date, while interest is charged at 1% per month on the unpaid tax.