Deadline for Income Tax Audit Report Extended to October 7, 2024

Deadline for Income Tax Audit Report Extended to October 7, 2024

The Income Tax Department has announced an extension for the submission of the income tax audit report for the financial year 2023-24. Taxpayers who were initially required to submit their audit reports by September 30, 2024, can now do so by October 7, 2024. This extension allows additional time for those mandated by law to conduct an income tax audit and file the corresponding report online via the Income Tax e-filing portal.

Significance of the Extension

This extension is crucial as late submission of the tax audit report can result in significant penalties. Taxpayers who miss the deadline could face a fine of either ₹1.5 lakh or 0.5% of their total sales, whichever is lower. Therefore, the new deadline offers some relief for businesses and individuals who need more time to complete their audit obligations.

Official Announcement from the CBDT

The Central Board of Direct Taxes (CBDT) made the announcement on September 29, 2024, through a circular. The circular states:

“CBDT has decided to extend the specified date for filing various audit reports for the financial year 2023-24, which was originally set for September 30, 2024, for assessees referred to in clause (a) of Explanation 2 to sub-section (1) of section 139 of the Income Tax Act. The deadline is now extended to October 7, 2024.“

Read More: Tips for Preparing for a Income Tax Audit

Who Benefits from the Extension?

According to the circular, this extension applies to all taxpayers required to undergo a tax audit. This includes individuals, companies, and other entities whose Income Tax Returns (ITRs) are due by October 31, 2024. Anyone who was originally required to submit their tax audit report by September 30 can now take advantage of the extended deadline and file by October 7, 2024.

For taxpayers who fall under the mandatory audit category, this extension offers crucial extra time to ensure compliance without incurring penalties. Make sure to upload your tax audit report by the new deadline to avoid any late fees or penalties.

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        Who Needs to Conduct an Income Tax Audit and Submit the Report by September 30, 2024?

        Who Needs to Conduct an Income Tax Audit and Submit the Report by September 30, 2024?

        The deadline for eligible taxpayers to submit their income tax audit report on the e-filing ITR portal is September 30, 2024. Not all taxpayers need to meet this deadline, and some may not even be required to undergo an income tax audit. However, failing to file the audit report when required can lead to significant consequences.

        Two key issues arise if the tax audit report is not uploaded on time:

        1. Defective ITR: Your income tax return (ITR) will be considered defective if the audit report is not uploaded.
        2. Penalty: Missing the deadline will result in penalties under Section 271B of the Income Tax Act.

        Who Must Conduct a Tax Audit?

        Income tax audit requirements are governed by Section 44AB of the Income Tax Act, 1961. The deadline for filing the audit report for the financial year 2023-24 (assessment year 2024-25) is September 30, 2024. The rules vary depending on whether the taxpayer is a business, professional, or using a presumptive taxation scheme.

        Businesses:

        A tax audit is mandatory for businesses if:

        • The sales, turnover, or gross receipts exceed ₹10 crores in the previous year.
        • However, if cash transactions (receipts/payments, including sales and expenses) exceed 5% of total receipts or payments, the audit threshold reduces to ₹1 crore.
        • If 95% or more of the business’s transactions are through banking channels, the audit threshold remains at ₹10 crores.

        Professionals:

        Tax professionals need to undergo an audit if:

        • Gross receipts exceed ₹75 lakhs in the previous year.
        • If cash transactions exceed 5% of the total, the audit threshold is reduced to ₹50 lakhs.

        Presumptive Taxation Scheme:

        Taxpayers under presumptive taxation schemes (Sections 44AD, 44ADA, 44AE, 44BB, or 44BBB) must get a tax audit done if:

        • They declare profits lower than what is required under the respective sections.
        • Their income exceeds the basic exemption limit.

        Consequences of Not Submitting the Tax Audit Report

        • Penalty: Failing to complete the tax audit by the due date can result in a penalty, which is the lower of:

          • 0.5% of total sales, turnover, or gross receipts.
          • ₹1.5 lakhs.

          While there are no explicit provisions for filing the tax audit report after the deadline, it may be possible to file the report belatedly. However, late filing will likely attract a penalty.

        • Defective ITR: If the tax audit report is not filed even after the deadline (even with a penalty), the tax authorities may treat your income tax return as defective. Filing the tax audit date is mandatory in the ITR form, and failure to do so can lead to this issue.

        Extended Deadline for Transfer Pricing Cases

        For taxpayers required to file a Transfer Pricing report in Form 3CEB, the deadline to submit the tax audit report is extended to October 31, 2024.

        Read More: Vivad Se Vishwas 2.0: Reduced Settlement for Declarations Filed by December 31

        Taxpayers Exempt from a Full-Fledged Audit

        If you fall under any of the categories requiring a tax audit, ensure that your audit is completed and the report is uploaded by the September 30, 2024 deadline to avoid penalties and issues with your ITR filing. Make sure to consult your accountant or tax professional to confirm whether or not you need to conduct a tax audit and meet the filing requirements.

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              Tax Audit and Filing Deadlines for FY 2023-24

              Tax Audit and Filing Deadlines for FY 2023-24

              As the financial year 2023-24 progresses, taxpayers must be mindful of their obligations under the Income Tax Act, particularly regarding tax audits. Tax audits serve a critical role in ensuring the accuracy of financial records and compliance with tax laws. They help curb tax evasion by verifying the income tax returns (ITRs) filed by taxpayers, especially those with significant business or professional income.

              What is a Tax Audit?

              A tax audit is an examination of a taxpayer’s books of accounts from an income tax perspective. It is conducted by a practicing Chartered Accountant (CA) to verify the correctness of the income declared and expenses reported in the income tax return. The audit ensures compliance with tax laws and discourages underreporting of income or overstating of expenses to lower tax liabilities.

              Who Needs to Conduct a Tax Audit?

              Several categories of taxpayers are required by law to get their accounts audited and submit an audit report. Below are the key groups:

              Taxpayers with Business Income

              • If the turnover or gross receipts of a business exceed Rs 1 crore in a financial year, the taxpayer must get their accounts audited.
              • In the case of businesses opting for the presumptive taxation scheme under Section 44AD, a tax audit is required if their turnover exceeds Rs 2 crore.

              Taxpayers with Income from Goods Carriages (Section 44AE)

              Taxpayers earning from plying, hiring, or leasing goods carriages need to get their accounts audited if the presumptive income under Section 44AE is less than their actual income and their turnover exceeds Rs 10 lakh.

              Taxpayers with Professional Income

              Professionals such as doctors, chartered accountants, and lawyers must get their accounts audited if their gross receipts exceed Rs 50 lakh in a financial year.

              • Even if the gross receipts are below Rs 50 lakh, professionals must get a tax audit if they claim profits lower than 50% of their gross receipts under the presumptive taxation scheme.

              Other Conditions for Tax Audit

              Taxpayers opting for the presumptive taxation scheme under Section 44AD must follow the scheme for five consecutive years. If they fail to meet the conditions and their total income exceeds the exempt threshold, they must get their accounts audited under Section 44AB. Additionally, if a business reports profits below the specified threshold, a tax audit becomes mandatory.

              Important Deadlines for FY 2023-24

              • Tax Audit Report Submission:
                The deadline for submitting the tax audit report for FY 2023-24 (AY 2024-25) is September 30, 2024. For businesses subject to transfer pricing audits, the deadline extends to October 31, 2024.

              • Income Tax Return Filing:
                For taxpayers who are required to submit a tax audit report, the deadline to file the ITR is October 31, 2024.

              Exceptions to Tax Audit Requirement

              Certain taxpayers are exempt from conducting a tax audit under Section 44AB. If a taxpayer is already required to audit their accounts under another law (e.g., the Companies Act), they don’t need to undergo a separate audit for income tax purposes. Instead, they can file the audit report under that law, along with the prescribed tax audit forms (Form 3CA and Form 3CD).

              Additionally, professionals with gross receipts of up to Rs 75 lakh are exempt from the tax audit requirement, provided their cash receipts are less than or equal to 5% of their total gross receipts.

              Read More: Income Tax Audit: Rules, Types, and Why They Matter

              Tax audits are essential for ensuring transparency and accuracy in financial reporting, particularly for businesses and professionals with significant income. Timely submission of the tax audit report and filing of the ITR by the respective deadlines helps avoid penalties and ensures compliance with the law. For FY 2023-24, the key dates to remember are September 30, 2024, for tax audit report submission and October 31, 2024, for ITR filing.

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