Tax Audit Late Fee FY 2025-26: Is ₹75,000 Applicable or Not for FY 2025-26 (AY 2026-27)?
Over the last few weeks, a single line has been circulating across WhatsApp groups, social media, and even some professional blogs:
“From now on, a late tax audit report will cost you ₹75,000, and beyond one month, ₹1,50,000!”
This has triggered genuine panic among small business owners, professionals, and even chartered accountants who are currently working through the FY 2025-26 (AY 2026-27) tax audit season, with the due date of 30 September 2026 fast approaching.
Here’s the short answer: the ₹75,000 / ₹1,50,000 fee does NOT apply to FY 2025-26. It becomes applicable only from Tax Year 2026-27 onwards, under the new Income-tax Act, 2025.
Let’s break down exactly why, and what tax audit consequences actually apply this year.
Why Is There So Much Confusion?
The confusion exists because two Income-tax Acts are technically in play at the same time:
- The Income-tax Act, 1961 — under which FY 2025-26 (AY 2026-27) is still assessed.
- The Income-tax Act, 2025 — which came into force on 1 April 2026 and governs income earned from that date onward.
Many people assumed that because the new Act is now in force, any tax audit report filed after 1 April 2026 — even one relating to an earlier year — would automatically attract the new, steeper fee. That assumption is incorrect.
Understanding the Two Timelines
| FY 2025-26 (Current Audit Season) | Tax Year 2026-27 (Next Audit Season) | |
|---|---|---|
| Period covered | 1 April 2025 – 31 March 2026 | 1 April 2026 – 31 March 2027 |
| Assessment Year | AY 2026-27 | AY 2027-28 |
| Governing law | Income-tax Act, 1961 | Income-tax Act, 2025 |
| Tax audit provision | Section 44AB | Section 63 |
| Audit report form | Form 3CA/3CB + Form 3CD | New Form No. 26 |
| Consequence of delay | Penalty under Section 271B | Fee under Section 428(c) |
| Reasonable-cause defence | Available under Section 273B | Not available — fee is automatic |
The key point: the tax year to which the audit relates decides the applicable law — not the actual date on which the report is uploaded. This is confirmed by the transition (repeal-and-savings) provisions of the new Act, under Section 536, which state that the old Income-tax Act, 1961 continues to apply to any tax year that began before 1 April 2026, even if the related compliance work or filing happens after that date.
What Applies to FY 2025-26: Section 271B, Not Section 428
For the tax audit relating to FY 2025-26 (AY 2026-27), due by 30 September 2026, a delay continues to attract the old penalty framework under Section 271B of the Income-tax Act, 1961 — not the new fixed fee.
How Section 271B Penalty Works
Under Section 271B, the penalty for failing to get accounts audited or for not furnishing the tax audit report on time is the lower of:
- 0.5% of total sales, turnover, or gross receipts, OR
- ₹1,50,000
This means the penalty is not a fixed amount — it depends on your turnover, and ₹1,50,000 is only the ceiling, not the automatic outcome.
Example:
- If turnover is ₹50 lakh → 0.5% = ₹25,000 (this is the applicable penalty, not ₹1.5 lakh)
- If turnover is ₹10 crore → 0.5% works out to ₹5 lakh, but the penalty is capped at ₹1,50,000
The Reasonable Cause Protection
Under Section 271B, penalty proceedings are also discretionary, not automatic. Section 273B of the Income-tax Act, 1961 provides that no penalty shall be imposed if the taxpayer proves there was a reasonable cause for the delay — such as genuine technical glitches on the e-filing portal, natural calamities, or other bona fide reasons. The Assessing Officer has the power to drop the penalty entirely in such cases.
Bottom line for FY 2025-26: A taxpayer should not calculate “15 days late = ₹75,000.” That formula simply does not apply this year.
What Changes From Tax Year 2026-27: The New Section 428 Fee
Once we move into Tax Year 2026-27 (income earned between 1 April 2026 and 31 March 2027, assessed as AY 2027-28), the position changes significantly under the Income-tax Act, 2025.
The tax audit requirement moves to Section 63, and the consequence of delay is governed by Section 428(c), which introduces a fixed, mandatory fee:
| Delay Period | Fee Payable |
|---|---|
| Up to one month from the due date | ₹75,000 |
| Beyond one month | ₹1,50,000 |
Key Differences From the Old Regime
- It’s a fee, not a penalty. The law explicitly recharacterises this as a “fee,” similar in spirit to the late-filing fee under Section 234F (which it effectively replaces for audit reports).
- No reasonable-cause defence. Unlike Section 271B/273B, the new fee is designed to apply automatically, regardless of the reason for delay. This has been officially clarified in government FAQs on the new Act, which confirm that the reasonable-cause provision does not extend to this fee because it is meant to be charged automatically.
- Not linked to turnover. Even a small business with modest turnover can face the full ₹1,50,000 fee if the delay exceeds one month — because the amount is fixed, not a percentage of turnover.
- Even a single day’s delay triggers the ₹75,000 slab once this provision becomes applicable.
Important: It Is Not Charged “Per Month”
A common misreading is to assume ₹75,000 is charged every month of delay. That is incorrect. The structure is a two-slab fee, not a recurring monthly charge:
- Delay of 10 days → ₹75,000
- Delay of 25 days → ₹75,000
- Delay of 29 days → ₹75,000
- Delay crossing one month (e.g., 32+ days) → ₹1,50,000 (not ₹75,000 + ₹1,50,000)
Quick Comparison Table: Old vs New Regime
| Particulars | FY 2025-26 / AY 2026-27 | Tax Year 2026-27 onwards (AY 2027-28) |
|---|---|---|
| Governing law | Income-tax Act, 1961 | Income-tax Act, 2025 |
| Audit section | Section 44AB | Section 63 |
| Audit form | 3CA/3CB + 3CD | Form 26 |
| Consequence of delay | Penalty — Section 271B | Fee — Section 428(c) |
| Nature of levy | Discretionary penalty | Mandatory, automatic fee |
| First slab amount | Not fixed; based on turnover | ₹75,000 (delay up to 1 month) |
| Ceiling / second slab | ₹1,50,000 (statutory maximum) | ₹1,50,000 (delay beyond 1 month) |
| Reasonable-cause relief | Available (Section 273B) | Not available |
| Is ₹75,000 automatically applicable? | No | Yes |
What’s the Due Date for FY 2025-26 Tax Audit?
As things currently stand, the tax audit report for FY 2025-26 (AY 2026-27) is due by 30 September 2026, with the corresponding income tax return (for audit cases) due by 31 October 2026.
Representations have been made by professional bodies (including chartered accountant associations) requesting an extension of this deadline, citing the usual practical difficulties around portal load and overlapping compliance deadlines. However, as of the most recent update, no official CBDT notification extending the due date had been issued. Taxpayers and professionals should continue working towards the existing due date unless and until CBDT issues a formal notification — verify this directly on the Income Tax Department’s official portal before relying on any unofficial extension claims circulating online.
Frequently Asked Questions
Q1. Is the tax audit late fee for FY 2025-26 really ₹75,000? No. The new ₹75,000 fee under Section 428 applies only from Tax Year 2026-27 onwards. FY 2025-26 continues to be governed by the old Section 271B penalty framework.
Q2. Is the higher amount ₹15,000 or ₹1,50,000? It is ₹1,50,000, not ₹15,000. This figure applies as a ceiling under both the old and new regimes, though calculated differently in each.
Q3. When will the ₹75,000 fee actually start applying? From Tax Year 2026-27 (1 April 2026 to 31 March 2027), corresponding to AY 2027-28, when tax audit reports are filed under Section 63 of the Income-tax Act, 2025.
Q4. Can I avoid the new fee by showing reasonable cause once it applies? No. Once the new fee regime takes effect, it is designed to apply automatically, without any “reasonable cause” exception — unlike the current Section 271B penalty.
Q5. What happens if I file my FY 2025-26 tax audit report late? You may face penalty proceedings under Section 271B of the Income-tax Act, 1961 — capped at ₹1,50,000 or 0.5% of turnover, whichever is lower — but you can seek relief by demonstrating reasonable cause under Section 273B.
Q6. Which form applies for FY 2025-26 versus Tax Year 2026-27? FY 2025-26 uses the existing Form 3CA/3CB along with Form 3CD. From Tax Year 2026-27, this is replaced by a new consolidated Form No. 26.
Key Takeaway
Don’t let the headlines confuse you. For the current tax audit season (FY 2025-26 / AY 2026-27, due 30 September 2026), the applicable law is still the Income-tax Act, 1961, and any delay is governed by the discretionary Section 271B penalty, not the new ₹75,000/₹1,50,000 fee.
The new, stricter, automatic fee under Section 428(c) of the Income-tax Act, 2025 is real — but it only kicks in for Tax Year 2026-27 onward. That said, given how significantly the compliance cost of delay is about to rise, this is the right time to build the habit of completing your tax audit well before the due date.
This article is for general informational purposes based on publicly available provisions of the Income-tax Act, 1961 and the Income-tax Act, 2025 as understood at the time of writing. Tax laws and CBDT notifications can change; please verify the latest due dates and provisions with a qualified chartered accountant or on the official Income Tax Department website before making compliance decisions.
