Penalties Section 271B — Penalty for Failure to Get Accounts Audited (s.44AB)
Section 271B — Penalty for Failure to Get Accounts Audited (s.44AB)
Income Tax Act 1961 — 271B
The Penalty
0.5% of turnover, capped at ₹1,50,000
- Cap
- ₹1,50,000
- Calculation base
- Total sales, turnover or gross receipts in the financial year
- Period
- One-time penalty per assessment year.
When does this apply?
Turnover exceeded the s.44AB threshold (₹1 crore business / ₹50 lakh profession, or the ₹10 crore digital-receipts threshold) AND audit not conducted / report not furnished by the specified date.
Calculate this amount
This estimate applies only the rate and caps published in the authored rule for this page.
Worked examples
| Scenario | Calculation | Result |
|---|---|---|
| Turnover ₹2 crore, no audit | 0.5% × ₹2 cr = ₹1,00,000; below ₹1,50,000 cap | ₹1,00,000 |
| Turnover ₹50 crore, no audit | 0.5% × ₹50 cr = ₹25,00,000; capped at ₹1,50,000 | ₹1,50,000 |
How it is levied
AO discretion; reasonable-cause defence u/s 273B applies (illness of the tax auditor, natural calamity, etc.).
Confirm the s.44AB threshold applicable on the facts (business/profession/digital-receipts test) before treating audit as required — cases at the borderline should be reviewed for the ₹10 crore digital-receipts safe harbour. ⚠ Finance Act 2025 may have revised the s.271B quantum (some readings put the new rate at 0.1% of turnover, ₹50,000 minimum, ₹5,00,000 maximum, effective FY 2025-26). Confirm the current version from CBDT before quoting the amount.