In a move that brings significant relief to businesses and professionals across India, the Income Tax Department has announced an extension for submitting income tax audit reports. The new deadline is now October 31, 2025, pushed back from the original September 30, 2025. This decision by the Central Board of Direct Taxes (CBDT) comes after numerous requests from professional associations, including chartered accountant bodies, who highlighted the challenges faced by taxpayers and practitioners in meeting the earlier deadline. This extension provides crucial extra time for ensuring meticulous financial compliance.
But what exactly is a tax audit, and who is required to undergo one? A tax audit is a comprehensive review of a business or professional's financial records to confirm their adherence to the Income Tax Act. It involves a detailed examination of income, expenses, and deductions to ensure accurate reporting and correct tax calculations. This audit is mandatory for specific taxpayers: businesses with a turnover exceeding ₹1 crore (or ₹10 crore if cash transactions constitute less than 5% of total transactions) and professionals whose gross receipts surpass ₹50 lakh annually. Additionally, certain other conditions might necessitate an audit.
For those falling under the audit mandate, the process involves scrutinizing various crucial documents, including cash books, ledgers, bank statements, stock records, and sales/purchase invoices, all to verify the financial health of the business or profession as of the financial year-end. Missing this extended deadline can lead to serious consequences. Failure to file the tax audit report under Section 44AB can attract a penalty under Section 271B of the Income Tax Act. This penalty is 0.5% of the total sales, turnover, or gross receipts, capped at ₹1,50,000. However, the CBDT allows for no penalty if a 'reasonable cause' for non-compliance can be demonstrated. It's always advisable to consult a qualified tax professional to ensure complete and timely compliance.
