Representation by Madhya Pradesh Tax Consultants’ Association (MPTCA) Seeking Reconsideration of Proposed Late Fee for Delay in Furnishing Tax Audit Report – Finance Bill, 2026
The Madhya Pradesh Tax Consultants’ Association (MPTCA) has submitted a representation to the Finance Minister and the Chairman of the Central Board of Direct Taxes seeking reconsideration of the proposed late fee for delay in furnishing tax audit reports under the Finance Bill, 2026. The proposal prescribes a late fee of ₹75,000 for the first month of delay and ₹1,50,000 for the subsequent month. The association stated that the proposed levy appears excessively stringent and may impose disproportionate financial burden on taxpayers, particularly in cases of minimal or unavoidable delays. It highlighted that existing provisions already address non-compliance with tax audit requirements and that delays in furnishing the audit report do not cause hardship to third-party taxpayers. The representation also noted practical circumstances such as technical issues, illness, natural calamities, festivals, and local disturbances that may lead to delays. MPTCA suggested introducing a proportional late fee structure linked to the duration of delay and recommended a mechanism allowing waiver or reduction of late fee in deserving cases.
Madhya Pradesh Tax Consultants Association
Date: 09.03.2026
To,
1. The Hon’ble Finance Minister,
Ministry of Finance,
Government of India,
Room No. 15074-15075, 5th Floor,
B-Wing, Kartavya Bhawan – 1, New Delhi.
2. The Hon’ble Chairman,
Central Board of Direct Taxes (CBDT),
Department of Revenue,
Ministry of Finance,
Government of India,
New Delhi
Subject: Representation Seeking Reconsideration of Proposed Late Fee for Delay in Furnishing Tax Audit Report under the Finance Bill, 2026
Respected Sir/Madam,
On behalf of the Madhya Pradesh Tax Consultants’ Association, (Registration No. 5650/2001), we respectfully submit this representation regarding the proposal contained in the Finance Bill, 2026, presented before the Lok Sabha on 1st February 2026, whereby a late fee has been proposed to be levied for delay in furnishing the Tax Audit Report by the Assessee.
As per the proposal, a late fee of Rs. 75,000 for the first month and Rs. 1,50,000 for the subsequent month has been prescribed in cases where the Tax Audit Report is not furnished within the prescribed time. With utmost respect, it is submitted that the proposed levy appears to be excessively stringent and disproportionate, particularly in cases where the delay may be minimal or attributable to genuine and unavoidable circumstances.
It is pertinent to note that the Income-Tax Act, 1961 contains provisions to address non-compliance in respect of tax audit requirements. Earlier, Section 271B (now Section 446 of the Income Tax Act, 2025) provided for a penalty for failure to get accounts audited or to furnish the audit report within the prescribed time. Therefore, the introduction of late fee structure of such magnitude may result in unreasonable financial burden on taxpayers.
It is respectfully submitted that, in the case of delay in furnishing a Tax Audit Report, no direct hardship is caused to any third-party taxpayer. Such delay does not affect the tax credit of any other person nor does it prejudice the rights or compliances of any other taxpayer. The furnishing of the Tax Audit Report is essentially a compliance obligation between the assessee and the tax administration. Therefore, the imposition of a substantial and rigid late fee, even for a short or marginal delay, appears to be disproportionate and may result in unintended hardship to taxpayers and professionals without any corresponding prejudice being caused to any third party.
In practical circumstances, delays may occur due to several genuine reasons such as:
a. technical issues on the income tax portal,
b. unforeseen natural calamities,
c. illness,
d. local disturbances,
e. public holidays,
f. festivals,
g. or other unavoidable circumstances affecting taxpayers or professionals.
It is also relevant to note that a significant number of taxpayers liable for tax audit under Section 63 of the proposed Income Tax Act (similar to Section 44AB of the Income-tax Act, 1961) belong to the non-corporate sector. Such taxpayers often do not have extensive in-house compliance infrastructure or dedicated accounting teams, and therefore even minor delays may occur despite bona fide efforts to comply within the prescribed timelines. In such situations, the imposition of a substantial fixed late fee may operate in an unduly harsh manner.
In view of the above, it is humbly submitted that the proposed provision may kindly be reconsidered and suitably rationalised. Instead of a rigid fixed late fee structure, it would be more equitable and reasonable if the levy is structured in a manner that bears a proportionate relationship with the period of delay.
Accordingly, it is respectfully suggested that the late fee may be structured as follows:
- 8,000 where the delay in furnishing the Tax Audit Report does not exceed 15 days; and
- Thereafter, Rs. 5,000 per day for the period of delay beyond 15 days.
or any such similar structure as deemed fit.
Such a structure would ensure proportionality between the extent of delay and the levy, while still encouraging timely compliance.
Further, it is respectfully suggested that a suitable mechanism may also be incorporated to provide relief in deserving cases. In this regard, a provision enabling waiver or reduction of such late fee by the competent authority, on the lines of the powers available under Section 239 of the Income Tax Act, 2025 may kindly be considered. Such a provision would ensure that in cases involving genuine hardship or reasonable cause, appropriate relief can be granted so that taxpayers and professionals are not subjected to undue hardship.
The introduction of a rational and proportionate late fee structure, coupled with a mechanism for waiver in appropriate cases, would ensure that compliance objectives are achieved while maintaining fairness and equity in the administration of tax laws.
We sincerely hope that the Hon’ble Ministry and the Central Board of Direct Taxes will kindly consider this representation and make suitable modifications in the proposed provision so that unnecessary hardship to taxpayers and professionals can be avoided.
We shall be grateful for your kind consideration of this request.
Thanking you
Yours faithfully
Senior Advocate Sumit Nema
President, Madhya Pradesh Tax Consultants Association
