BREAKING | Any Delay In Income Tax Audit Report May Attract ₹75,000 Late Fee, Proposes Finance Bill 2026

A single day's delay in furnishing a tax audit report may attract a fee of ₹75,000 under the proposed Income-tax Act, 2025, as per the scheme set out in the Finance Bill, 2026.

The Finance Bill, 2026 was presented in Parliament by Finance Minister Nirmala Sitharaman on Sunday.

Under the existing law, failure to comply with tax audit requirements attracted a penalty linked to turnover, capped at ₹1.5 lakh, and the penalty could be waived if the taxpayer showed a reasonable explanation for the delay.

Clause (c) of proposed section 428 provides that where any person fails to get his accounts audited for any tax year or years and furnish the report of such audit as required under section 63, he shall be liable to pay, by way of fee, a sum of ₹75,000 for a delay up to one month for which such failure continues, and a sum of ₹1,50,000 thereafter.

The provision does not provide for computation of the fee on a per-day basis. As framed, any delay falling within the period of up to one month would fall within the ₹75,000 slab.

The Explanatory Memorandum to the Finance Bill, 2026 states that the penalty under section 446 for failure to get accounts audited has been converted into a fee under proposed section 428(c). It further states that a graded fee of ₹75,000 and ₹1,50,000 is proposed depending upon the period of delay.

The memorandum also clarifies that section 446 has been omitted and that the same section has been replaced by a penalty provision for failure to furnish information or for furnishing inaccurate information in respect of transactions of crypto assets.

The expression “any person” used in section 428(c) is not limited to companies and applies to all assessees who are required to get their accounts audited under section 63, including individuals, Hindu undivided families, firms, LLPs, companies, and other entities.

The provisions are proposed to take effect as part of the new income-tax legislation applicable from the 2026–27 tax year, subject to enactment.