Time limit for initiation of penalty under section 271B

The time limit for initiation of penalty under Section 271B of the Income-tax Act, 1961 is: - 3 years from the end of the financial year in which the audit report was due to be furnished (if the assessee has furnished the audit report within the due date); - 6 years from the end of the financial year in which the audit report was due to be furnished (if the assessee has not furnished the audit report within the due date). Section 271B states that if an assessee fails to get their accounts audited or furnish the audit report as required under Section 44AB, the Assessing Officer may impose a penalty. However, the penalty proceedings must be initiated within the time limits specified above. Please note that these time limits are subject to change,

Section 271B penalty applies when a taxpayer required to get their accounts audited under Section 44AB fails to do so or fails to furnish the audit report by the due date.

Penalty amount: 0.5% of turnover/gross receipts, subject to a minimum of Rs 1,500 and a maximum of Rs 1.5 lakh.

Time limit for initiation: The Assessing Officer can initiate Section 271B penalty proceedings within 6 months from the end of the financial year in which the default occurred. So for AY 2026-27 (default in FY 2025-26), penalty proceedings can be initiated up to September 30, 2027.

However, the key thing here: the tax audit report (Form 3CA/3CB + 3CD) for AY 2026-27 is due September 30, 2026. Filing it late or not at all is what triggers the 271B penalty. If you are in the mandatory audit bracket (typically turnover above Rs 1 crore for business or Rs 50 lakh for professionals), complete the audit and upload the report before September 30 to avoid this penalty.

This [advance tax and compliance guide](https://taxgarden.in/blog/advance-tax-installment-due-dates-2026-27) covers the full September 2026 compliance calendar including tax audit and advance tax deadlines.