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Section 271B Audit Penalty
Income Tax · Audit penalty

Section 271B penalty:when the tax audit was missed.

If a business that needed a tax audit did not get one, or filed the report late, a penalty of 0.5% of turnover, up to ₹1.5 lakh, can be imposed. It is not automatic: a reasonable cause can avoid it. We prepare the reply to the show-cause notice and appeal if needed.

Respond to the penalty notice
Reasonable cause presentedFees agreed in writingAppeal if needed
Penalty0.5% of turnover
Maximum₹1.5 lakh
DefenceReasonable cause
RemedyAppeal

What the penalty is.

Where a business or profession needed a tax audit but did not get one, or did not file the report by the due date, the officer can impose a penalty of 0.5% of turnover or gross receipts, up to ₹1.5 lakh.

Old and new section numbers

From 1 April 2026 the Income-tax Act, 2025 has renumbered these provisions. Notices for tax years before 2026-27 still refer to the Income-tax Act, 1961 sections, which is why this page uses them. We check which Act applies to your notice.

Reasonable cause.

  • Resignation of the auditorAuditor left close to the due date.
  • Illness or deathOf a key person responsible.
  • Technical problemsPortal or system problems at the due date.
  • Genuine beliefBelief that the audit was not required, on reasonable grounds.
  • Natural eventsFloods, fire or similar events affecting records.
  • Audit done in timeAudit completed in time, with only the upload delayed.

How we help.

01
Review

Notice and facts

Turnover, dates and what went wrong.

02
Evidence

Support the cause

Emails, medical records, portal screenshots and dates.

03
Reply

To the show-cause

Clear explanation and request to drop the penalty.

04
Appeal

If levied

To the Commissioner (Appeals). See Appeal to Commissioner of IT.

Why clients trust us with notices.

Every notice read in full

We read the notice, the AIS and your return together before advising.

Replies on time

Deadlines tracked from the day you send us the notice.

Plain-English explanation

What the notice means, what is at stake and what we recommend.

Faceless and online

Most proceedings are handled online, so you never need to travel to India.

Chartered Accountants

Replies and representation by Chartered Accountants.

Fees agreed in writing

A written scope and fee before we start.

Penalty replies for businesses across the UK.

We handle Indian income tax notices for NRIs, returning Indians and UK-owned businesses throughout the UK. Faceless proceedings are online, so it makes no difference where you live.

London

City of LondonCanary WharfHarrowWembleySouthallHounslowIlfordEast HamCroydonEdgware

South East

ReadingSloughMilton KeynesOxfordWatfordLutonCrawleyGuildford

Midlands

BirminghamLeicesterCoventryNottinghamWolverhamptonDerbyNorthampton

North of England

ManchesterLeedsBradfordSheffieldLiverpoolNewcastlePreston

East and South West

CambridgePeterboroughBristolSwindonSouthamptonBath

Scotland, Wales, NI

EdinburghGlasgowAberdeenDundeeCardiffSwanseaBelfast

Section 271B FAQs.

0.5% of turnover or gross receipts, up to ₹1.5 lakh.
No. The officer must issue a show-cause notice, and a reasonable cause can avoid the penalty.
For example, the auditor resigning near the due date, serious illness, or genuine portal problems, supported by evidence.
Yes, to the Commissioner (Appeals), and then to the Tribunal.

Facing a tax audit penalty?

Send us the notice and the facts. We will reply and appeal if needed.

Respond to the penalty notice+91 9819 000 511

This page is general guidance based on the Income-tax Act, 2025 and the rules and return forms as they stand. It is not legal or financial advice for your situation. Forms, eligibility and due dates can change each year, so please check with us before filing.