Budget 2026: One-Day Delay in Tax Audit Report to Cost Rs. 75,000, FM Proposes
Budget 2026 proposes a flat Rs. 75,000 fee for any delay, even one day, in filing a tax audit report under the new income tax law.
The Union Budget for the Financial Year 2026–27 was presented by Finance MinisterNirmala Sitharaman in the Lok Sabha today (Sunday, 1 February 2026). The Finance Bill, 2026 proposes a strict fee regime for delays in filing tax audit reports, under which even a one-day delay may attract a fee of Rs. 75,000 under the proposed Income-tax Act, 2025. As per Clause (c) of proposed...
The Union Budget for the Financial Year 2026–27 was presented by Finance MinisterNirmala Sitharaman in the Lok Sabha today (Sunday, 1 February 2026).
The Finance Bill, 2026 proposes a strict fee regime for delays in filing tax audit reports, under which even a one-day delay may attract a fee of Rs. 75,000 under the proposed Income-tax Act, 2025.
As per Clause (c) of proposed Section 428, any person who fails to get their accounts audited and furnish the audit report as required under Section 63 will be liable to pay a fixed fee, instead of a penalty.
“(c) 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,––
(i) a sum of ₹ 75000 for a delay up to one month for which such failure continues; and
(ii) a sum of ₹ 150000 thereafter; “
The proposed provision prescribes a fee of Rs. 75,000 for a delay of up to one month. If the delay exceeds one month, the fee will rise to Rs. 1.5 lakh. The law does not provide for calculation of the fee on a per-day basis, meaning any delay within the first month, including a single day, will fall within the Rs. 75,000 slab.
Under the existing Income-tax Act, failure to comply with tax audit requirements attracts a penalty linked to turnover, subject to a maximum of Rs. 1.5 lakh. Importantly, the current law allows the penalty to be waived if the taxpayer is able to show reasonable cause for the delay.
The proposed framework removes this discretion. The Explanatory Memorandum to the Finance Bill, 2026 states that the earlier penalty provision under Section 446 has been converted into a fee under proposed Section 428(c), with a graded structure based on the length of delay.
The use of the term “any person” in the provision means the fee will apply to all assessees required to undergo tax audit, including individuals, Hindu Undivided Families, partnership firms, limited liability partnerships, companies, and other entities.
The Finance Bill also proposes a similar fee structure under Section 428(d) for failure to furnish reports from an accountant as required under Section 172, with a fee of Rs. 50,000 for delay up to one month and Rs. 1 lakh thereafter.
These provisions form part of the new Income-tax Act, 2025, which is proposed to apply from the 2026–27 tax year, subject to enactment by Parliament.
If passed in its present form, the proposal will mark a shift towards a fixed-fee compliance regime for tax audit defaults, replacing the earlier penalty-based system that allowed relief based on reasonable cause.
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