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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Corporate Social Responsibility (CSR)

Banyan Agro Ltd was due to transfer Rs 90 lakh to a Schedule VII Fund but defaulted. It is a start-up company recognised by the Central Government under the notification of DPIIT. Applying sections 135(7) and 446B, what is the maximum penalty on the company?

The maximum penalty is Rs 2 lakh. The normal section 135(7) penalty works out to Rs 1 crore, half of which is Rs 50 lakh, but section 446B caps the penalty on a start-up company at Rs 2 lakh.

  1. ARs 1 crore
  2. BRs 90 lakh
  3. CRs 2 lakhCorrect
  4. DRs 1.8 crore

Explanation

Section 135(7) penalty is the lesser of Rs 1.8 crore and Rs 1 crore, which is Rs 1 crore. Section 446B limits a start-up to not more than half of that, subject to a maximum of Rs 2 lakh for a company. Half is Rs 50 lakh, but the Rs 2 lakh cap applies.

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