Union Budget 2026: Tax Audit Penalty of ₹75,000 for Missing Deadline by One Day

The Finance Bill 2026 introduces a fixed penalty for taxpayers who fail to obtain a tax audit or submit the audit report on time, aiming to provide clear cost certainty for non‑compliance. 

Penalty Details for Late Tax Audit Submission 

Under Section 63, a taxpayer who does not get accounts audited or does not furnish the audit report incurs a fee of ₹75,000 for any delay up to 30 days.  

If the default continues beyond 30 days, the fee doubles to ₹1,50,000. The same amount applies for a delay of even a single day. 

Graded Fee Structure for Accountant Reports 

Section 172 sets a separate schedule for failure to submit reports from a chartered accountant. The initial month attracts a fee of ₹50,000, which rises to ₹1,00,000 for each subsequent month of non‑submission. 

Standard Return Fees and Income Thresholds 

For ordinary income tax returns, the penalty is capped at ₹1,000 for taxpayers with total income up to ₹5,00,000. All other cases attract a flat fee of ₹5,000. 

Effective Date and Scope of Application 

The graded penalty regime becomes effective on April 1, 2026, and applies to the tax year 2026‑2027 and all subsequent years. It replaces discretionary penalties with a predetermined fee schedule. 

Read More: Budget 2026: Did Finance Minister Announce Any Income Tax Relief? 

Implications for Taxpayers 

Taxpayers must ensure timely audit completion and report submission to avoid the stipulated fees. The clear structure assists in budgeting compliance costs and reduces uncertainty around potential penalties. 

Conclusion 

The Finance Bill 2026 establishes a ₹75,000 penalty for a one‑day audit delay, with higher charges for prolonged defaults and separate fees for accountant reports. The rules take effect from April 1, 2026, and apply to all future tax years. 

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