CBDT Circular 07/2026: Tax Audit by 21 October, ITR by 21 November 2026 — Who Is Covered, Who Is Not, and the Interest Nobody Waived

Table of Contents

1. What the circular says — and the legal basis in a transition year
2. Who is covered, who is not
3. Missed 21 October? Section 271B, Section 273B and what to do this week
4. Section 234A, 234B and 234C: the extension does not stop interest
5. Filing the return after 21 November: belated, loss carry-forward, late fee, updated return
6. First filing season of the transition: 1961 Act for AY 2026-27, 2025 Act from tax year 2026-27
7. Calendar: 21 November and what sits around it
8. Frequently asked questions

1. What the circular says — and the legal basis in a transition year

Circular No. 07/2026 was issued on 28 September 2026, two days before the original audit-report date, and formalised a press release of the same date. It extends two dates for one class of assessee:

The circular is issued under Section 119 of the Income-tax Act, 1961 — the CBDT's general power to relax time limits — read with Section 536 of the Income-tax Act, 2025. That cross-reference matters: the 2025 Act came into force on 1 April 2026 and repealed the 1961 Act, but Section 536(2)(c) keeps the 1961 Act alive for every assessment year up to 2026-27 and for all pending proceedings. The CBDT therefore still acts under Section 119 of the repealed Act for AY 2026-27, through the saving clause of the new one. Returns for income earned in FY 2025-26 are filed under the 1961 Act, in the forms notified under the Income-tax Rules, 1962, and assessed under its sections; the 2025 Act's section numbers apply only to income from 1 April 2026. Our Income-tax Act, 2025 guide sets out the transition rules.

No reason is recorded in the circular beyond the representations received; professional bodies had sought a longer window, citing the portal's performance in September and the volume of the Form 3CD disclosures. The Board gave 21 days on each date.

2. Who is covered, who is not

Explanation 2 to Section 139(1) sets three due dates by serial number. The extension touches only Sl. No. 2.

Three points that generate most of the questions we get:

• A company with transfer-pricing transactions is Sl. No. 1, not Sl. No. 2. Its Form 3CEB and tax audit report were due on 31 October 2026 and its return is due on 30 November 2026 — later than 21 November, so the circular gives it nothing and takes nothing away. See transfer pricing compliance.
• A partner of an audited firm gets the 21 November date for the partner's own return, even if the partner has no audit of their own, because Sl. No. 2(c) is defined by the firm's audit status. The firm's audit report had to be in by 21 October for this to hold.
• Presumptive taxpayers under Section 44AD/44ADA whose turnover crossed the limits during FY 2025-26 are audit cases for this year under Section 44AB(a)/(b) or 44AB(e), and therefore Sl. No. 2. The commonest surprise in October is a proprietor who believed the 31 July date applied. Our presumptive taxation note covers the thresholds; the audit itself is handled under tax audit under Section 44AB.

3. Missed 21 October? Section 271B, Section 273B and what to do this week

The audit-report date has passed. An assessee under Sl. No. 2 who has not uploaded Form 3CA/3CB-3CD by 21 October 2026 is exposed to a penalty under Section 271B of one-half per cent of total sales, turnover or gross receipts, or ₹1,50,000, whichever is less — the cap is reached at ₹3 crore of turnover. The penalty is imposed by the Assessing Officer after a show-cause notice, and Section 273B provides that no penalty "shall be imposable" if the assessee proves reasonable cause for the failure.

Four things to do now, in this order:

1. Get the audit report uploaded. The portal accepts Form 3CD after the due date; the return cannot be processed properly without it, and every day of delay weakens the reasonable-cause case. A report filed on 28 October reads very differently from one filed in January.
2. Record the cause contemporaneously. Reasonable cause is a question of fact and is proved with documents dated at the time: the auditor's appointment and engagement date, the date books were handed over, portal error screenshots with the ticket number, medical certificates, the date a key accountant left. Tribunals have accepted an auditor's delay beyond the assessee's control, genuine portal failure and a bona fide belief that audit was not required (where the belief was reasonable) as cause; they have rejected pressure of work and ignorance of the law.
3. File the return by 21 November 2026 regardless. Section 271B is about the audit report; the return's own consequences (next sections) are separate and larger. A return filed on time with the audit report attached late limits the damage to 271B alone.
4. Do not wait for the penalty notice to make the case. Where the cause is strong, a short letter to the jurisdictional Assessing Officer at the time of filing the late report, setting out the cause with annexures, is usually the difference between a notice and no notice. Our income-tax notice team drafts these as a matter of course.

The penalty is per assessee per year, not per form; a company that files 3CA-3CD late and also has a Section 92E report late faces 271B once and 271BA (₹1,00,000) once.

4. Section 234A, 234B and 234C: the extension does not stop interest

Circular 07/2026 extends the date for furnishing the return. It does not say that the extension applies for the purpose of Section 234A, and in several earlier extensions the CBDT expressly said the opposite where self-assessment tax exceeded ₹1 lakh. The conservative reading — and the one we apply for clients — is:

• Section 234A (interest for default in furnishing the return): 1% per month or part of a month on the tax unpaid after TDS, advance tax and relief, from the day after the due date under Section 139(1) to the date of filing. Whether "due date" means 31 October or 21 November for AY 2026-27 is exactly the question the circular leaves open. Pay the self-assessment tax now; interest under 234A runs only on the unpaid balance, so a return filed on 15 November with tax already paid on 25 October has at most one month's interest exposure, and arguably none.
• Section 234B (advance tax paid below 90% of assessed tax): 1% per month from 1 April 2026 until the tax is paid. Unaffected by any return extension; it stops only when the tax is paid.
• Section 234C (deferment of instalments): fixed by the instalment dates in FY 2025-26; already crystallised.

Under the Income-tax Act, 2025 the same three provisions are Sections 423, 424 and 425 and apply from tax year 2026-27; they do not touch this return.

5. Filing the return after 21 November: belated, loss carry-forward, late fee, updated return

For a company with a loss year, the 21 November date is therefore the only date that matters: a belated return forfeits the loss. For a profitable company the belated return costs ₹5,000 plus interest, which is cheaper than a wrong return filed in a hurry — but the audit report must still be in, and the Section 271B clock is already running.

6. First filing season of the transition: 1961 Act for AY 2026-27, 2025 Act from tax year 2026-27

This is the last return season under the Income-tax Act, 1961, and the first in which both Acts are in force at the same time. The CBDT's transition FAQs make the split explicit: income of FY 2025-26 is assessed in AY 2026-27 under the 1961 Act — returns, revised returns, Section 143(2) scrutiny and appeals included — while TDS on payments made from 1 April 2026 is deducted under the 2025 Act's Section 393 and reported in the new forms under the Income-tax Rules, 2026. Practical consequences for this return:

• Form 3CD, Form 3CA/3CB and ITR-3/5/6 for AY 2026-27 are the 1961-Act forms. Clause references in 3CD (Section 40A(3), 43B, 269SS/269T, 14A) are the 1961 sections.
• Advance tax for FY 2026-27 (tax year 2026-27), now being paid, is under Sections 404–407 of the 2025 Act; the first-instalment shortfall interest is Section 425, not 234C. Clients who paid the 15 September 2026 instalment should check that the challan was accepted against the right year — the 2025 Act uses "tax year 2026-27", not "assessment year 2027-28".
• Carried-forward losses determined in the AY 2026-27 assessment flow into the 2025 Act under Section 536(2) — the FAQs confirm continuity, so a late return that forfeits a loss under Section 80 forfeits it under the new Act too.
• A notice for AY 2026-27 issued after 1 April 2026 still cites 1961-Act sections (143(2), 148); a notice citing Section 270 or 280 of the 2025 Act for this year is wrong on its face and should be challenged on jurisdiction before merits.

7. Calendar: 21 November and what sits around it

8. Frequently Asked Questions (FAQs)

What are the new due dates under CBDT Circular 07/2026?

For assessees under Sl. No. 2 of Explanation 2 to Section 139(1) — companies, persons whose accounts must be audited, and partners of such firms — the audit report under Section 44AB moved from 30 September to 21 October 2026 and the return from 31 October to 21 November 2026, for assessment year 2026-27.

Is the 30 November date for transfer-pricing cases extended?

No. Section 92E assessees are Sl. No. 1 and are not mentioned in the circular. Form 3CEB and the tax audit report were due on 31 October 2026 and the return is due on 30 November 2026.

I missed the 21 October audit-report date. What is the penalty?

Section 271B: 0.5% of turnover or gross receipts, or ₹1,50,000, whichever is lower, imposable by the Assessing Officer after a show-cause notice. Section 273B bars the penalty where reasonable cause is proved. Upload the report now, document the cause with dated evidence, and still file the return by 21 November.

Does the extension stop interest under Section 234A?

The circular does not say so, and earlier CBDT circulars have expressly denied the benefit for Section 234A where self-assessment tax exceeded ₹1 lakh. Treat 31 October as the date from which interest may be computed and pay the self-assessment tax immediately; interest runs only on the unpaid balance.

What if the return is filed after 21 November 2026?

It is a belated return under Section 139(4), allowed until 31 December 2026 with a late fee of ₹5,000 under Section 234F (₹1,000 if income is up to ₹5 lakh) and interest under 234A. Business and capital losses of the year cannot be carried forward (Section 80), though unabsorbed depreciation can. After 31 December only an updated return under Section 139(8A), with additional tax of 25% to 70%, is possible.

Which Act governs this return — 1961 or 2025?

The Income-tax Act, 1961. Section 536(2)(c) of the Income-tax Act, 2025 preserves the 1961 Act for assessment years up to 2026-27 and all pending proceedings. The 2025 Act applies to income from 1 April 2026 (tax year 2026-27), whose return will be filed in 2027.

Conclusion

Circular 07/2026 gives three weeks on two dates to one class of assessee and nothing else: no relief for transfer-pricing cases, none for the Section 234A interest clock, none for an audit report that is still not uploaded. The 21 November 2026 return date is the one that decides whether a loss year survives. If the audit report is late, upload it this week and build the Section 273B record now rather than when the notice arrives; if the tax is unpaid, pay it before the return rather than with it. Our income-tax return filing and Section 44AB audit teams are running both to the 21 November date, reviewed by CA V. Viswanathan (FCA, ACS, CFE) before upload.