What is Google penalty in SEO?

Google penalty is the negative impact on a website’s search rankings based on updates to Google’s search algorithms or manual review. Google penalizes sites for engaging in practices that are against its webmaster guidelines. Penalties can result in the drop of rankings for every page of a site, for a specific keyword, or for a specific page. Any drop in rankings brings with it a major drop in traffic for the site.
To check website has been affected by a Google penalty or not, website owners can use Google Webmaster Tools as well as analyze the timing of their traffic drop with the timing of known Google updates.