Tax Audit Late Fee 2026 | FY 2025-26 | AY 2026-27 | Section 271B vs New Section 428 | ₹75,000 or ₹1,50,000?
There is considerable confusion among taxpayers, businesses and professionals regarding the consequences of delay in filing the Tax Audit Report for FY 2025-26 (AY 2026-27).
The confusion has arisen because the Income-tax Act, 2025, which came into force from 1 April 2026, introduces a new fee structure for failure to get accounts audited and furnish the tax audit report.
Under the new provisions, the amount is:
- ₹75,000 for delay up to one month; and
- ₹1,50,000 thereafter.
This has led to an important question:
If the Tax Audit Report for FY 2025-26 is filed late, will the taxpayer have to pay ₹75,000 or ₹1,50,000?
The answer is: NO — the new ₹75,000 / ₹1,50,000 fee does not apply to FY 2025-26.
This is because FY 2025-26 relates to AY 2026-27 and is governed by the Income-tax Act, 1961, even if the tax audit report is actually filed after 1 April 2026.
The new mandatory fee regime applies to Tax Year 2026-27 and subsequent tax years.
Therefore, the distinction between the two years is extremely important.
1. First understand the transition
The biggest reason for the confusion is that two Income-tax Acts are operating during the transition period.
FY 2025-26
Income earned during:
1 April 2025 to 31 March 2026
This corresponds to:
AY 2026-27
and is governed by the:
Income-tax Act, 1961
Therefore, the tax audit requirement continues under:
Section 44AB
and the tax audit report continues in:
Form 3CA / Form 3CB + Form 3CD
Tax Year 2026-27
Income earned during:
1 April 2026 to 31 March 2027
This is governed by:
Income-tax Act, 2025
The corresponding tax audit provision is:
Section 63
and the new tax audit report is:
Form No. 26
Thus, the new tax-audit provisions and the new fee mechanism need to be examined separately for Tax Year 2026-27.
2. What is the new tax audit late fee?
Under the Income-tax Act, 2025, the new provision is contained in Section 428.
Where a person fails to get his accounts audited and furnish the audit report as required under Section 63, the prescribed fee is:
Delay up to one month
₹75,000
Delay beyond one month
₹1,50,000
Therefore, it is important to remember:
The amount is not ₹15,000.
The second amount is ₹1,50,000.
The provision is structured as a fee, rather than the earlier penalty mechanism.
3. Does ₹75,000 apply to FY 2025-26?
NO.
This is the most important clarification.
Suppose a taxpayer is required to get accounts audited for:
FY 2025-26 / AY 2026-27
The tax audit report is due on:
30 September 2026
If the taxpayer fails to comply by the due date, the new Section 428(c) fee of ₹75,000 or ₹1,50,000 does notautomatically become applicable merely because the actual filing takes place after 1 April 2026.
Why?
Because the audit relates to FY 2025-26, which began before 1 April 2026.
The transition provisions preserve the operation of the old Income-tax Act for such years.
4. What does the Income Tax Department say?
The Income Tax Department has specifically clarified the transition position.
For FY 2025-26, the Tax Audit Report:
- relates to AY 2026-27;
- continues to be governed by the Income-tax Act, 1961;
- must be filed in Form 3CA/3CB/3CD, as applicable; and
- remains subject to the old Act even if the actual filing occurs after 1 April 2026.
The Department’s FAQ specifically states that the tax audit report for FY 2025-26 is governed by the old Act.
Therefore, the date on which the report is uploaded is not the factor that determines whether the old or new late-fee regime applies.
The relevant factor is the tax year to which the audit relates.
5. Then what happens if FY 2025-26 Tax Audit Report is filed late?
For FY 2025-26, the consequence continues to be considered under the Income-tax Act, 1961.
The relevant provision is:
Section 271B
Section 271B provides for penalty for failure to get accounts audited or furnish the audit report as required under Section 44AB.
The penalty can be:
Lower of:
0.5% of total sales, turnover or gross receipts
OR
₹1,50,000
Therefore, the maximum amount under the old provision is:
₹1,50,000
But this is fundamentally different from the new ₹75,000 / ₹1,50,000 fee.
6. Penalty under Section 271B is NOT the same as the new late fee
This distinction is extremely important.
Old Act — FY 2025-26
The consequence is:
Penalty under Section 271B
It is not an automatic fixed late fee of ₹75,000.
The Assessing Officer may impose the penalty subject to the provisions of the Act.
The maximum is generally:
0.5% of turnover/gross receipts or ₹1.50 lakh, whichever is lower.
There is also an important protection under:
Section 273B
Section 273B provides that penalty under certain provisions, including Section 271B, may not be imposed where the taxpayer proves that there was reasonable cause for the failure.
Therefore, for FY 2025-26, the taxpayer should not mechanically calculate:
“Tax audit late by one month = ₹75,000.”
That is not the correct position.
7. What changes from Tax Year 2026-27?
Now consider a tax audit relating to:
Tax Year 2026-27
This period starts on:
1 April 2026
and ends on:
31 March 2027
This is governed by the:
Income-tax Act, 2025
The tax audit requirement is under:
Section 63
and the new tax audit report is:
Form No. 26
For failure to get the accounts audited and furnish the report within the prescribed time, the new fee under Section 428 applies.
Therefore:
| Particulars | Tax Year 2026-27 onwards |
|---|---|
| Delay up to one month | ₹75,000 |
| Delay beyond one month | ₹1,50,000 |
This is the new regime.
8. Is ₹75,000 charged every month?
No.
This is another important point.
The provision does not say:
₹75,000 per month.
It provides:
Up to one month of delay
₹75,000
Thereafter
₹1,50,000
So it is not a recurring ₹75,000 every month.
For example, if the tax audit report is delayed by:
- 10 days → ₹75,000
- 20 days → ₹75,000
- 30 days → ₹75,000
- More than one month → ₹1,50,000
The provision should therefore not be interpreted as a monthly late fee.
9. Example — Tax Year 2026-27
Suppose a taxpayer is required to furnish the tax audit report by:
30 September 2027
Case 1 — Report filed on 10 October 2027
Delay = 10 days
Applicable fee:
₹75,000
Case 2 — Report filed on 25 October 2027
Delay = 25 days
Applicable fee:
₹75,000
Case 3 — Report filed on 5 November 2027
Delay exceeds one month.
Applicable fee:
₹1,50,000
Therefore, once the delay crosses the one-month threshold, the higher fee becomes applicable.
10. Example — FY 2025-26
Now take the current audit season.
Suppose:
FY 2025-26
Tax Audit Report due date:
30 September 2026
Suppose the report is filed on:
15 October 2026
The taxpayer should NOT say:
“I am late by 15 days, therefore I have to pay ₹75,000.”
The new Section 428(c) fee does not apply to this FY 2025-26 audit merely because the filing is taking place after 1 April 2026.
The audit continues to be governed by the old Act.
Therefore, the relevant consequence is the Section 271B penalty framework, subject to the provisions including reasonable cause under Section 273B.
11. Why is there so much confusion?
There are three major reasons.
Reason 1 — New Income-tax Act came into force on 1 April 2026
Taxpayers see the new Act and assume that every compliance taking place after 1 April 2026 is automatically governed by the new Act.
That is not correct.
The transition provisions are important.
Reason 2 — Section 428 specifically mentions ₹75,000
The new Act clearly contains the ₹75,000 and ₹1,50,000 amounts.
Therefore, many articles and social-media posts are stating:
“Tax audit late fee is now ₹75,000.”
That statement is incomplete.
The correct statement is:
The ₹75,000 / ₹1,50,000 tax-audit fee applies under the new Act for Tax Year 2026-27 onwards. It does not apply to the FY 2025-26 tax audit merely because the report is filed after 1 April 2026.
Reason 3 — People are confusing FY 2025-26 with Tax Year 2026-27
This is perhaps the biggest source of confusion.
FY 2025-26
= 1 April 2025 to 31 March 2026
= AY 2026-27
= Old Act
Tax Year 2026-27
= 1 April 2026 to 31 March 2027
= New Act
= New provisions
This distinction should be clearly understood.
12. Important comparison: Old vs New
| Particulars | FY 2025-26 / AY 2026-27 | Tax Year 2026-27 onwards |
|---|---|---|
| Governing law | Income-tax Act, 1961 | Income-tax Act, 2025 |
| Tax audit provision | Section 44AB | Section 63 |
| Tax audit form | 3CA/3CB + 3CD | Form 26 |
| Consequence of delay | Penalty under Section 271B | Fee under Section 428 |
| First slab | Not fixed at ₹75,000 | ₹75,000 |
| Higher slab | Up to ₹1.50 lakh under penalty framework | ₹1,50,000 |
| Reasonable-cause defence | Section 273B applies to Section 271B penalty | New fee mechanism is different |
| ₹75,000 mandatory fee | Not applicable | Applicable |
| ₹1,50,000 fee after one month | Not applicable as Section 428 fee | Applicable |
13. What about the maximum ₹1.50 lakh under Section 271B?
Another important point is that both regimes can appear to have a ₹1.50 lakh figure, but the nature of the liability is different.
Under old Act
Section 271B:
Penalty = lower of 0.5% of turnover/gross receipts or ₹1.50 lakh
For example, if turnover is ₹50 lakh:
0.5% of ₹50 lakh =
₹25,000
So the maximum penalty based on the formula would be ₹25,000, not automatically ₹1.50 lakh.
If turnover is ₹10 crore:
0.5% = ₹5 lakh
But the statutory maximum would be:
₹1.50 lakh
Thus, ₹1.50 lakh is the ceiling, not an automatic penalty.
14. New Act — completely different mechanism
Under the new Section 428 regime, the fee is specifically prescribed as:
₹75,000
for delay up to one month
and
₹1,50,000
thereafter.
It is therefore not calculated as 0.5% of turnover.
This is a significant practical change.
For example, if under the new Act a small business has turnover of only ₹20 lakh but is subject to tax audit and delays the audit report beyond one month, the statutory fee structure can still reach:
₹1,50,000
because the new provision is not based on a percentage of turnover.
15. Does reasonable cause protect the taxpayer under the new fee?
This is another area where professionals need to be careful.
The old regime under Section 271B is a penalty mechanism, and Section 273B provides statutory relief where reasonable cause is established.
The new Section 428 regime is expressly structured as a fee.
Therefore, one should not automatically assume that the new ₹75,000 / ₹1,50,000 fee will be dealt with in exactly the same manner as the old Section 271B penalty.
The legal character of the levy has changed.
For Tax Year 2026-27 onwards, taxpayers should therefore take the new Section 428 provisions seriously and should not rely on the old “reasonable cause” framework as though nothing has changed.
16. What is the position for the current Tax Audit season?
For the current tax-audit season:
FY 2025-26 / AY 2026-27
The tax audit report is presently due by:
30 September 2026
The Income Tax Department has specifically clarified that this audit remains under the old Act and is to be filed using:
- Form 3CA, where applicable;
- Form 3CB, where applicable; and
- Form 3CD.
Therefore, if someone says:
“From 1 April 2026, tax audit late fee is ₹75,000, so FY 2025-26 late audit will also attract ₹75,000.”
That is not the correct interpretation.
17. What if the Tax Audit Due Date itself is extended?
This is another important practical point.
If CBDT officially extends the due date for FY 2025-26 tax audit, the consequences need to be examined with reference to the extended due date.
Until an extension is officially notified, taxpayers should work with the applicable statutory due date.
For the current FY 2025-26 tax audit season, the presently notified due date is:
30 September 2026
18. Simple formula to remember
You can remember the entire issue with this simple rule:
FY 2025-26
Old Act → Section 44AB → Form 3CA/3CB/3CD → Section 271B penalty
Tax Year 2026-27 onwards
New Act → Section 63 → Form 26 → Section 428 fee
And the new fee is:
₹75,000 → up to one month
₹1,50,000 → thereafter
19. Most important FAQs
Q1. Is tax audit late fee for FY 2025-26 ₹75,000?
No.
The new Section 428 fee of ₹75,000 does not apply to FY 2025-26 merely because the report is filed after 1 April 2026.
Q2. Is the amount ₹15,000 or ₹1,50,000?
The correct amount is:
₹1,50,000
not ₹15,000.
Q3. When does ₹75,000 apply?
The ₹75,000 fee applies under the new regime for Tax Year 2026-27 onwards, where the tax audit report is delayed by up to one month.
Q4. What happens if delay exceeds one month under the new Act?
The prescribed fee becomes:
₹1,50,000.
Q5. Is ₹75,000 charged every month?
No.
The provision is ₹75,000 for delay up to one month and ₹1,50,000 thereafter.
Q6. What is applicable for FY 2025-26?
The old Act continues to apply.
The consequence is considered under Section 271B, subject to the provisions of the old Act, including Section 273B.
Q7. Which tax audit form is applicable for FY 2025-26?
Form 3CA / 3CB + Form 3CD, as applicable.
Q8. Which form is applicable from Tax Year 2026-27?
The new:
Form No. 26
The new Form 26 consolidates the earlier tax audit forms.
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