Text
The text below is the section as served by the CBIC tax information portal on 17 September 2026, with the portal's own amendment footnote markers (shown as small numerals before a bracket) and its footnotes.[1] The Act as published in the Gazette of India is the legal source.
Section 126, verbatim (show)
*Section 126. General disciplines related to penalty.-
(1) No officer under this Act shall impose any penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross negligence.
Explanation.-For the purpose of this sub-section,-
(a) a breach shall be considered a "minor breach" if the amount of tax involved is less than five thousand rupees;
(b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of record.
(2) The penalty imposed under this Act shall depend on the facts and circumstances of each case and shall be commensurate with the degree and severity of the breach.
(3) No penalty shall be imposed on any person without giving him an opportunity of being heard.
(4) The officer under this Act shall while imposing penalty in an order for a breach of any law, regulation or procedural requirement, specify the nature of the breach and the applicable law, regulation or procedure under which the amount of penalty for the breach has been specified.
(5) When a person voluntarily discloses to an officer under this Act the circumstances of a breach of the tax law, regulation or procedural requirement prior to the discovery of the breach by the officer under this Act, the proper officer may consider this fact as a mitigating factor when quantifying a penalty for that person.
(6) The provisions of this section shall not apply in such cases where the penalty specified under this Act is either a fixed sum or expressed as a fixed percentage.
*Enforced w.e.f. 1st July, 2017 .
Questions to answer on the file
Questions a reviewer answers from the engagement file, grouped by the part of the section they come from. They describe what the section asks; they do not decide it.
Scope, and what sub-section (6) takes out the section as a whole and 126(6)
Questions to answer on the file4 questions
No penalty for a minor breach or an easily rectifiable error in documentation 126(1) with its Explanation
Questions to answer on the file7 questions
The penalty must be commensurate 126(2)
Questions to answer on the file2 questions
No penalty without an opportunity of being heard 126(3)
Questions to answer on the file2 questions
What the order imposing the penalty must specify 126(4)
Questions to answer on the file3 questions
A voluntary disclosure before discovery 126(5)
Questions to answer on the file7 questions
Amendment history
The CBIC text carries 1 footnote. The table gives each in the source's own terms. Effective dates are as the footnotes state them.[1]
| Note | Change | Instrument | Effective from |
|---|---|---|---|
| records the commencement of the section; it does not change its words | the notification enforcing the section | w.e.f. 1st July, 2017 |
Relationship with other provisions
| Provision | Connection | Words that tie them |
|---|---|---|
| Section 122 | 126(1) applies to Section 122 | 126(1) "any penalty", the penalties of section 122 being penalties imposed by an officer under this Act |
| Section 125 | 126(1) applies to Section 125 | 126(1) "any penalty", section 125 being the general penalty |
| Section 122 | 126(6) excludes Section 122 | 126(6) "either a fixed sum or expressed as a fixed percentage", several penalties in section 122 being stated in exactly those terms |
| Section 75 | 126(3) as prescribed Section 75 | 126(3) "an opportunity of being heard", the general procedure for a hearing standing in section 75 |
Circulars and notifications
Circulars and notifications in the CBIC repository that cite this section, newest first, by number, date and subject. A listing here does not say what an instrument decides; read the instrument.
Notifications (1)
| Number | Date | Subject |
|---|---|---|
| Notification No. 16/2025-Central Tax | 17 September 2025 | Seeks to notify clauses (ii), (iii) of section 121, section 122 to section 124 and section 126 to 134 of Finance Act, 2025 to come into force. |
Unsettled questions
The words of section 126 do not answer these questions. Where one decides a matter on the file, the answer depends on the position taken on it.
- Sub-section (6) takes out a penalty that is "either a fixed sum or expressed as a fixed percentage". Section 125 states its penalty as an amount to which the penalty "may extend", and several clauses of section 122 state a sum or the tax amount, "whichever is higher". The sub-section does not say whether a ceiling, or a choice between a sum and a proportion, is a fixed sum or a fixed percentage — and on the answer turns whether this section protects anybody at all in the commonest cases
- Sub-section (1) forbids a penalty for "minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross negligence". Whether the documentation limb is an instance of a minor breach, so that freedom from fraudulent intent and gross negligence is required of all three limbs, or a separate limb carrying its own conditions, is left open by the words
- Sub-section (2) requires the penalty to depend on the facts and circumstances of each case and to be commensurate with the degree and severity of the breach. It does not say what an order must record for that requirement to be met, nor what follows where the order records nothing
- Sub-section (5) turns on disclosure "prior to the discovery of the breach by the officer". It does not say what fixes that date — the officer's first knowledge, the commencement of an audit or inspection, or the issue of a notice
See also
- Section 125 of the CGST Act, 2017: general penalty
- Section 127 of the CGST Act, 2017: power to impose penalty in certain cases
References
- Central Board of Indirect Taxes and Customs. "Section 126. General disciplines related to penalty". Central Goods and Services Tax Act, 2017, CBIC tax information portal, with amendment footnotes 1 to 1. Retrieved 17 September 2026.
External links
- CGST Act, 2017, Section 126 on the CBIC tax information portal