Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
271B: 0.5%, max ₹1.5 lakh
0.5% of turnover/receipts up to a ₹1,50,000 cap, for not getting or not filing the audit on time.
Reasonable cause
Genuine reasons (illness, records lost, first year) can get the penalty dropped, but you must explain it.
How the penalty actually works
The 0.5% is computed on total turnover or gross receipts, not on profit, so even a low-margin business can face a sizeable figure up to the ₹1,50,000 cap. The penalty isn’t automatic — the Assessing Officer must give you a hearing, and if you show reasonable cause (genuine illness, records lost to fire or theft, a delay caused by the auditor, or a bona fide first-year mix-up) it can be dropped entirely. What rarely works is simple oversight or being busy. Keeping dated evidence of why a delay happened is the practical way to protect yourself if the question ever comes up. The penalty is separate from the interest and the lost loss carry-forward that a late return brings, so a single missed audit can cost on three fronts at once — another reason to treat the September date as fixed.