The Finance Bill 2026 has introduced a stringent graded fee system, placing significant financial weight on audit compliance. Under the proposed Section 428, taxpayers who fail to furnish mandated audit reports now face heavy penalties starting at Rs 75,000, scaling up to Rs 1,50,000 for prolonged delays.
The new framework categorises defaults into distinct tiers, prioritising audit and accountant reports with the highest fee structures. Under Section 63 of the legislation, if a taxpayer fails to get accounts audited or furnish the report, a fee of Rs 75,000 applies for delay of even a day. This doubles to Rs 1,50,000 if the failure continues beyond 30 days.
Under Section 172, a failure to furnish the required report from an accountant will attract a fee of Rs 50,000 for the first month, rising to Rs 1 lakh thereafter.
For standard returns of income, the fee is capped at Rs 1,000 for those with a total income up to Rs 5,00,000. For all other cases, the fee is set at Rs 5,000.
These rules are set to take effect from April 1, 2026, applying to the tax year 2026-2027 and all subsequent years. By replacing discretionary penalties with a fixed, “graded” fee mechanism, the government aims to provide taxpayers with absolute certainty regarding the cost of non-compliance.
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