Section 122 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A long list, and the length matters — several of the twenty-one describe things a compliant business can do inadvertently.
Section 122(1) lists twenty-one acts by a taxable person, on any of which he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded, the tax not deducted or short deducted or deducted but not paid under s.51, the tax not collected or short collected or collected but not paid under s.52, the input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.
The twenty-one, grouped
Invoicing and documents
- (i) supplies goods or services without issue of any invoice, or issues an incorrect or false invoice;
- (ii) issues any invoice or bill without supply in violation of the Act or rules;
- (xix) issues any invoice or document using the registration number of another registered person;
- (xiv) transports any taxable goods without the cover of documents as specified.
Tax collected but not paid
- (iii) collects any amount as tax but fails to pay it beyond three months from the due date;
- (iv) collects any tax in contravention of the Act but fails to pay it beyond three months.
TDS and TCS
- (v) fails to deduct under s.51(1), deducts less, or fails to pay the amount deducted under s.51(2);
- (vi) fails to collect under s.52(1), collects less, or fails to pay the amount collected under s.52(3).
Credit and refund
- (vii) takes or utilises input tax credit without actual receipt of goods or services, fully or partially;
- (viii) fraudulently obtains refund of tax;
- (ix) takes or distributes input tax credit in contravention of s.20 or the rules.
Records, information and registration
- (x) falsifies or substitutes financial records, produces fake accounts or documents, or furnishes false information or return with an intention to evade tax;
- (xi) is liable to be registered but fails to obtain registration;
- (xii) furnishes false information with regard to registration particulars, at the time of applying or subsequently;
- (xvi) fails to keep, maintain or retain books of account and other documents as required;
- (xvii) fails to furnish information or documents called for, or furnishes false information or documents during any proceedings.
Conduct and evasion
- (xiii) obstructs or prevents any officer in the discharge of his duties;
- (xv) suppresses his turnover leading to evasion of tax;
- (xviii) supplies, transports or stores any goods which he has reasons to believe are liable to confiscation;
- (xx) tampers with, or destroys any material evidence or document;
- (xxi) disposes of or tampers with any goods that have been detained, seized or attached.
The penalty formula
"Ten thousand rupees or an amount equivalent to..., whichever is higher."
The comparator changes with the offence:
| Offence type | The amount compared against ₹10,000 |
|---|---|
| Evasion offences | The tax evaded |
| s.51 TDS failures | Tax not deducted, short deducted, or deducted but not paid |
| s.52 TCS failures | Tax not collected, short collected, or collected but not paid |
| Credit offences | ITC availed of, passed on, or distributed irregularly |
| Refund offences | The refund claimed fraudulently |
Two observations.
"Whichever is higher" means ₹10,000 is a floor, not a cap. On a large credit passed on irregularly, the penalty equals that credit.
Several clauses have no tax comparator. Clause (xiii) obstruction, clause (xvi) records, clause (xx) tampering with evidence — none involves a quantified tax, credit or refund. For those, ₹10,000 is what the formula produces.
The clauses that catch ordinary businesses
(xi) Failure to obtain registration. No intent element. A business that crosses the threshold and registers late is within the clause on its face, and the penalty is the higher of ₹10,000 and the tax involved. Aggregate turnover →
(xiv) Transporting taxable goods without the specified documents. An expired e-way bill, or a movement without a delivery challan where Rule 55 required one, engages it — though s.129 ordinarily governs a roadside case. Rule 55 →
(xvi) Failure to keep, maintain or retain books. Rule 56 is detailed, and s.36 requires retention until seventy-two months from the due date of the annual return. A record-keeping lapse is within the clause. Rule 56 →
(xvii) Failure to furnish information or documents called for. This is the clause behind many penalty proposals following an audit or an unanswered letter.
(iii) Tax collected but not paid beyond three months. Note the overlap with s.76, which requires such an amount to be paid forthwith and contemplates a penalty equal to the amount. Section 76 →
The controls that matter, and the defences
Section 126 — the general disciplines. No penalty for minor breaches, defined as a breach where the tax involved is less than five thousand rupees, or an omission or mistake in documentation that is easily rectifiable — an error apparent on the face of the record — made without fraudulent intent or gross negligence. But s.126(6) disapplies the section where the penalty is a fixed sum or a fixed percentage, which is a real limitation on its use against s.122(1). Section 126 →
Section 75(13) — where a penalty is imposed under s.73, s.74 or s.74A, no penalty for the same act or omission shall be imposed under any other provision. This is the strongest answer to a s.122 penalty proposed alongside a demand for the same conduct. Section 75(7) →
Section 122(1A) — the personal penalty on a person who retains the benefit of a clause (i), (ii), (vii) or (ix) transaction at whose instance it was conducted. Distinct from s.122(1), and it requires both conditions. Section 122(1A) →
Explanation 1(ii) to s.74A — concluding the demand against the main person deems the s.122 and s.125 proceedings against co-noticees concluded. Section 74A penalty windows →
Section 128 — the Government may, by notification on the Council's recommendations, waive in part or full any penalty under s.122, s.123 or s.125, or any late fee under s.47, for a class of taxpayers and under specified mitigating circumstances.
Key takeaways
- Twenty-one listed acts, with a penalty of ₹10,000 or the amount involved, whichever is higher.
- ₹10,000 is a floor, not a cap — on large credit or refund offences the penalty tracks the amount.
- Several clauses have no tax comparator, so ₹10,000 is the figure.
- Clauses (xi), (xiv), (xvi) and (xvii) catch ordinary compliance failures without an intent element.
- Section 75(13) bars a s.122 penalty for the same act where a demand penalty is imposed.
- Section 126 limits minor-breach penalties, but s.126(6) disapplies it to fixed sums and percentages.
Read next
- Section 126: General Disciplines Relating to Penalty
- Section 125: The General Penalty, and How It Is Misused
- Co-Noticees and the Section 122(1A) Personal Penalty
- Sections 122-138 CGST — Penalties, Prosecution and Arrest
Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act as amended to 31 March 2026 (ICAI Bare Law, 12th edition).
Key Facts About Section 122
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
What is the penalty under section 122(1)?
Ten thousand rupees or an amount equivalent to the tax evaded, the tax not deducted or collected or not paid over, the credit availed, passed on or distributed irregularly, or the refund fraudulently claimed — whichever is higher.
Is ten thousand rupees a maximum?
No. It is a floor; the penalty is the higher of that and the amount involved.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Section 122: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.