Section 271B - Income Tax Act

Section 271B of the Income Tax Act imposes a penalty on taxpayers for not getting accounts audited or failure to furnish a tax audit report. The penalty under Section 271B is imposed on defaulting taxpayers for not getting the accounts audited or failure to submit to the Income Tax Department the report furnished by the tax auditor. The penalty is applicable exclusively if the taxpayer is unable to state a reasonable cause for the lapse.

Section 271B - Income Tax Act

Failure to get accounts audited.

"271B. If any person fails, without reasonable cause, to get his accounts audited in respect of any previous year or years relevant to an assessment year or obtain a report of such audit as required under section 44AB, the Income-tax Officer may direct that such person shall pay, by way of penalty, a sum equal to one-half per cent. of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of one hundred thousand rupees, whichever is less".

Penalty under Section 271B

If the taxpayer commits a default under this Section, the assessee shall be penalized with a penalty which is equal to 0.5% of the total sales, turnover or gross receipts in business or of the gross receipts in the profession of the particular previous year; or a sum of Rs 1,50,000, whichever is lesser.

Due Date for Filing Tax Audit Report

Taxpayers who are getting their accounts audited are required to file income tax returns by the 30

th of September every year. Thus ITR-2, ITR-3, ITR-5 and ITR-6 form that requires tax audit would become due on 30th September of each year.

Tax Audit Limit

Proprietorship firms and Partnership firms involved in carrying on a profession with gross receipts of more than Rs.50 lakhs must complete a tax audit. Tax audit is mandatory for proprietorship firm involved in doing business if sales turnover exceeds Rs.2 crores. LLPs with an annual turnover of more than Rs.40 lakhs or a capital contribution of Rs.25 lakhs are required to be audited by a Chartered Accountant. Maintenance of book of accounts is mandatory for LLP, irrespective of annual turnover. All types of companies including private limited company and

one person company are required to obtain a tax audit every year, irrespective of annual turnover or capital.

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Frequently Asked Questions

Common questions about Section 271B Income Tax Act: Penalties and Requirements.

Section 271B of the Income Tax Act imposes a penalty on taxpayers for not getting their accounts audited or failing to furnish a tax audit report. The penalty is applicable if the taxpayer is unable to state a reasonable cause for the lapse.

The penalty under Section 271B is equal to 0.5% of the total sales, turnover, or gross receipts in business, or the gross receipts in the profession for the relevant previous year, or a sum of Rs 1,50,000, whichever is less.

Taxpayers who are required to get their accounts audited must file their income tax returns by the 30th of September every year. This includes ITR-2, ITR-3, ITR-5, and ITR-6 forms that require a tax audit.

Proprietorship firms and partnership firms involved in carrying on a profession with gross receipts of more than Rs.50 lakhs must complete a tax audit. Additionally, proprietorship firms involved in business with a sales turnover exceeding Rs.2 crores are also required to undergo a tax audit.

Yes, LLPs with an annual turnover of more than Rs.40 lakhs or a capital contribution of Rs.25 lakhs are required to be audited by a Chartered Accountant. Maintenance of book of accounts is mandatory for LLPs, irrespective of their annual turnover.

Yes, all types of companies, including private limited companies and one-person companies, are required to obtain a tax audit every year, irrespective of their annual turnover or capital.

If a taxpayer fails to get their accounts audited without a reasonable cause, the Income Tax Officer may direct the taxpayer to pay the penalty under Section 271B of the Income Tax Act.

The penalty under Section 271B can be avoided if the taxpayer can state a reasonable cause for not getting their accounts audited or failing to furnish the tax audit report.

The tax audit must be conducted by a Chartered Accountant, who will furnish the tax audit report to the taxpayer.

The penalty under Section 271B applies to taxpayers who are required to get their accounts audited based on the criteria specified in the Income Tax Act, such as turnover or gross receipts.