Budget 2026 – Penalties Replaced with Fixed Fees

From 1 April 2026, the Income-tax law will become simpler and fairer. The Government has decided to replace certain penalties with mandatory fees. This reduces disputes, litigation and officer discretion. ━━━━━━━━━━━━━━ 🔍 Why this change? Earlier: ❌ Penalties were discretionary ❌ Officers decided whether to levy penalty ❌ Led to appeals & litigation Now: ✔ Fixed fees ✔ Automatic & predictable ✔ No scope for disputes ━━━━━━━━━━━━━━ 🧾 Major Changes Introduced 1️⃣ Failure to get Tax Audit done Earlier (Section 446): • Penalty up to ₹1.50 lakh or 0.5% of turnover Now (Section 428(c)): • Fixed Fee of ₹75,000 or ₹1,50,000 (depending on delay) ━━━━━━━━━━━━━━ 2️⃣ Failure to submit Accountant’s Report (Transfer Pricing) Earlier (Section 447): • Penalty of ₹1,00,000 Now (Section 428(4)): • Fixed Fee of ₹50,000 or ₹1,00,000 (depending on delay) ━━━━━━━━━━━━━━ 3️⃣ Failure to file SFT / Reportable Transactions Earlier (Section 454): • ₹500 per day • ₹1,000 per day after notice • No upper limit Now: ✔ Converted into mandatory fee ✔ Maximum cap of ₹1,00,000 introduced This avoids never-ending penalties. ━━━━━━━━━━━━━━ A big step towards trust-based taxation. ━━━━━━━━━━━━━━ 📞 Need help with Tax Audit, SFT, Transfer Pricing or compliance? We ensure zero-risk, fully compliant filings.