New Delhi: A delay of even one day in submitting a tax audit report could lead to a penalty of Rs 75,000 under the new income tax law proposed in the Union Budget 2026.
The government plans to replace the existing Income tax Act with a new law from April 1, 2026. One of the major changes is the introduction of fixed fees for non compliance instead of variable penalties decided by tax officers.
Under the new rules, taxpayers who are required to get their accounts audited must submit the audit report within the prescribed due date. If they fail to do so, a flat fee of Rs 75,000 will be charged for delays of up to one month. If the delay goes beyond one month, the fee will increase to Rs 1.5 lakh.
This means that even a one day delay can attract the full fee of Rs 75,000. The rule will apply to individuals, firms, companies and other entities that fall under the tax audit requirement.
Earlier, penalties for late submission of audit reports were often linked to turnover or left to the discretion of tax authorities. In many cases, taxpayers could avoid penalties by showing reasonable cause. Under the new system, such discretion will be removed and fixed amounts will be charged.
The government says the move is aimed at bringing clarity, reducing litigation and encouraging timely compliance. By setting clear and predictable fees, authorities hope taxpayers will take deadlines more seriously.
Apart from this, the new law also focuses on simplifying tax procedures and reducing disputes between taxpayers and the department. However, tax experts have warned that businesses and professionals will need to be more careful with deadlines, as even small delays could now prove costly.
The new income tax law will come into effect from April 1, 2026, if approved by Parliament.