Income Tax Rules: Late Audit Reports Can Lead to ₹1.5 Lakh Penalty
Failing to File Tax Audit on Time? Penalty May Reach ₹1.5 Lakh: The Union Budget 2026–27 has proposed fixed fees for delays in filing tax audit reports. Finance Minister Nirmala Sitharaman announced on February 1 that taxpayers who fail to get their accounts audited and submit the audit report on time will have to pay ₹75,000 for a delay of up to one month. If the delay exceeds one month, the fee will rise to ₹1.5 lakh.
Currently, tax authorities can levy a penalty of 0.5% of turnover or sales, subject to a maximum of ₹1.5 lakh. The new proposal replaces this penalty-based system with a clear fee structure, helping taxpayers know in advance the cost of non-compliance.
Tax professionals believe this move will reduce disputes and improve transparency in tax compliance. The new fee provisions will apply from April 1, 2026, giving taxpayers time to prepare for the change.
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