The Statutory Brief

IT Act 1961 → 2025 / Section 270AA

Penalties

Section 270AA → Section 440

Immunity from penalty and prosecution

Section 270AA of the old Income-tax Act, 1961 · new section 440 under the Income-tax Act, 2025

New reference Section 440

Income-tax Act, 1961Section 270AA

  • Immunity from 270A penalty and prosecution if tax and interest paid and no appeal filed
  • Before 1 March 2026: not available for misreporting cases (the 1961 Act was amended from 1 March 2026 to allow it at 100% additional tax)
  • Application within one month of the order

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Section 440

  • Substituted by the Finance Act 2026 as 'waiver of penalty and immunity from prosecution'
  • Misreporting cases (439(11)(a)–(f)) can now get waiver by paying additional tax of 100% of tax on under-reported income
  • Unexplained income cases (439(11)(g)): 120%
  • Tax, interest and additional tax paid within the demand period; no appeal; one-month application window

Applies from tax year 2026-27 (from 1 April 2026).

What changed

A real change: misreporting cases, earlier excluded, can now obtain penalty waiver and prosecution immunity by paying additional income-tax of 100% (or 120%) in lieu of the 200% penalty. The same change was made to section 270AA of the 1961 Act from 1 March 2026; the 120% rate for unexplained income is only in section 440(1)(c) of the 2025 Act.

Practice notes

  • The AO decides within three months; the decision is final and not appealable.
  • No waiver or immunity if prosecution proceedings (Chapter XXII) have already been initiated (section 440(4)).

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

Can misreporting penalty be waived under the new Income Tax Act 2025?

Yes. From 1 April 2026, section 440 allows waiver if additional tax of 100% of the tax on under-reported income (120% for unexplained income) is paid and no appeal is filed.

What is section 270AA called in the new Income-tax Act, 2025?

Section 270AA of the Income-tax Act, 1961 corresponds to Section 440 of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).

What changed in section 270AA under the new Income Tax Act?

A real change: misreporting cases, earlier excluded, can now obtain penalty waiver and prosecution immunity by paying additional income-tax of 100% (or 120%) in lieu of the 200% penalty. The same change was made to section 270AA of the 1961 Act from 1 March 2026; the 120% rate for unexplained income is only in section 440(1)(c) of the 2025 Act.

Is section 270AA still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 270AA of the 1961 Act. Section 440 of the 2025 Act applies from tax year 2026-27.

Related sections

270A→439Penalty for under-reporting and misreporting of income115BBE→195Tax rate on unexplained income (cash credits, investments, money, expenditure)143→270Processing of returns (intimation) and scrutiny assessment