Flat Fine Fallacy: How Jan Vishwas Betrays Equality It Promised

However, three and a half months on, the Act is being notified in stages, and it is worth asking what Parliament put in the place of jail time. The answer is a penalty design that raises real constitutional doubts, now spread across 79 more laws than before.

Application of Flat Fines

Flat fines are attractive for obvious reasons: cheap to administer, easy to predict, simple for an officer to apply on the spot.

For instance, under the Legal Metrology Act, 2009, a shopkeeper caught selling with a faulty weighing scale for the first time gets an improvement notice. A second offence draws a civil penalty, and a repeat offence draws a criminal fine. At every stage, the amount is fixed by law regardless of who is paying it. A supermarket chain and a neighbourhood kirana store pay exactly the same fine for the same lapse. For the supermarket, it is a rounding error; for the kirana store, it could be a month's profit gone. Convenience for the regulator has come at the cost of fairness for the regulated, and fairness is not something our Constitution treats as optional.

The Classification Problem

Article 14 allows the State to treat people differently, provided that it has a justifiable aim, is proportional and creates an intelligible classification.

Turnover is regularly used as a unit of measurement to determine application of various laws to different groups of legal entities. India already sorts businesses by turnover for GST rates, MSME classification, and audit requirements. Hence, when a penalty schedule ignores turnover entirely, and fines a start-up and a listed conglomerate the same amount for an identical lapse, it fails the classification test, since treating very different entities as identical is as much a constitutional problem as treating similar entities differently.

This is where proportionality comes in. Its Indian origin lies in Chintaman Rao v. State of Madhya Pradesh (1950), which held that any restriction must not go further than what public interest genuinely requires. The Supreme Court applied this principle in Om Kumar v. Union of India (2001), testing whether the quantum of an administrative penalty was proportionate. Read together, these cases suggest a flat fine, which by design cannot be the least burdensome option for every offender it applies to, is vulnerable on functional grounds, not merely as rhetoric.

Furthermore, a small business fined the maximum flat penalty under any of the amended laws would have a genuine case, arguing the fine schedule fails the classification test, and its application fails the proportionality test, since it makes no room for the offender's capacity to pay. No such case has been reported yet, but that is unsurprising: most small businesses facing a penalty of a few thousand rupees would rather pay up than fight a constitutional battle. The absence of a challenge tells us about the cost of litigation, not whether the law is sound, and the exposure now sits in 79 more laws than it did in April.

Moreover, a flat, predictable fine is far easier for a large company to treat as a routine cost of doing business than for a company with thin margins. India does not maintain a public register of repeat offenders that would let anyone check whether big corporates simply budget for fines as a subscription fee, the way the United Kingdom's Health and Safety Executive's public enforcement register allows. That gap is worth noting, since it is what keeps this concern a structural incentive rather than a proven scandal.

The Administrative Objection, Answered

The natural objection is practical: turnover-linked fines need verified financial data for millions of businesses, and India lacks the enforcement machinery of a General Data Protection Regulation (“GDPR”) style regulator. However, Parliament need not look abroad to answer this.

The Patents Act 1970, the Trade Marks Act 1999 and the Geographical Indications of Goods (Registration and Protection) Act 1999, all three amended by the 2023 edition of this very decriminalisation project, already peg certain penalties to turnover rather than a flat number. Under Section 107(2) of the Trade Marks Act, 1999 and Section 42(2) of the GI Act, 1999, falsely representing a trade mark or a geographical indication as registered now draws a penalty of 0.5 per cent of the offender's turnover, from audited accounts, or ₹5 lakh, whichever is less. Under Section 122(2) of the Patents Act, furnishing false information to the Controller draws the same 0.5 per cent formula, capped instead at ₹5 crore. The ceiling differs by statute, but the underlying formula, a turnover percentage with a rupee cap as backstop, is identical.

This flips the Government's own rebuttal on its head. The “we lack the machinery” objection is not being tested against GST or Udyam data some future regulator might one day use. It is being tested against a formula Parliament itself has already built, used, and notified, inside a sister statute passed under the same decriminalisation banner. If the Controller of Patents and the Registrar of Trade Marks can already ask an offender for audited turnover and compute half a per cent of it, there is no serious argument that the DPIIT cannot ask the same of a shopkeeper under the Legal Metrology Act. GST returns, MCA filings and Udyam data only strengthen this further, since they give real-time turnover information without asking the offender at all.

Learning From What Already Works

None of this means undoing decriminalisation. It only means rethinking how the penalties are calculated, India's own IP statutes already show a percentage-of-turnover formula can be administered here.

In foreign jurisdictions, the European Union's GDPR caps fines at 2 to 4 percent of global turnover rather than fixing flat amounts, though that is a ceiling rather than a fully graded scale. Scandinavia's “day-fine” system goes further, scaling a fine to a person's daily income so the same offence causes roughly the same pain across income levels.

PRS Legislative Research's own brief on the 2025 version of this Act, withdrawn in March 2026 and replaced by the Act that eventually passed, had flagged that the UK's standard-scale system and Australia's automatically adjusting penalty units solve a related problem: inconsistent fines across different laws. That analysis was never carried forward into the final Act's own PRS summary. Parliament's own research arm had half the answer on file, and did not use it, even as its own 2023 IP amendments supplied the other half.

The Window That Is Still Open

One option is still available lies with the executive, not with Parliament. Section 1(2) of the 2026 Act lets the Central Government bring different provisions into force on different dates, so not every flat-fine clause is legally operative yet. The Finance Ministry brought the Act's amendments to the RBI, LIC, general insurance and pension laws into force only on 23 June, and the Power Ministry notified the Electricity Act changes barely three weeks earlier. Different ministries are still switching on their sections one at a time.

The Ministry of Commerce and Industry and DPIIT, which control the wider notification calendar, do not need a fresh law from Parliament to build turnover-linked fines into schedules not yet live. They administer the Patents, Trade Marks and GI Acts themselves, and have already shown they know how to draft this formula; they only need to use it again, in the same commencement window every other ministry is using. Substantive equality requires the law hurt every violator equally, not that it charge them all the same rupee amount. Fixing this at the notification stage is far cheaper than fixing it after a High Court is forced to.