As the October 31, 2025, deadline for filing income tax audit reports nears, businesses and professionals across India must be working to complete their audits and meet the requirements set by the Income Tax Department.
The audit, mandated under Section 44AB of the Income-tax Act, applies to taxpayers whose turnover or receipts exceed specified limits. Chartered accountants and firms are advising clients to prioritise completing audits on time, verifying all postings, and maintaining clear communication with auditors.
The deadline for submitting audit reports for the financial year 2024–25 was September 30, but the Central Board of Direct Taxes (CBDT) extended it to October 31.
Who requires a tax audit?
Businesses with annual turnover exceeding ₹1 crore must undergo a tax audit.
If cash receipts or payments are below 5% of total transactions, the threshold increases to ₹10 crore.
Professionals such as doctors, lawyers, architects, and chartered accountants with annual income above ₹50 lakh are also required to comply.
Certain taxpayers under presumptive taxation schemes, including Section 44ADA, may need audits if conditions are met.
Purpose of a tax audit
A tax audit examines books of accounts to ensure compliance with income tax laws, distinct from statutory or cost audits under other regulations. The main objectives include verifying the accuracy of declared income, maintaining proper records, and preventing tax evasion.
Filing process and compliance
Tax auditors must submit reports online using their Chartered Accountant credentials. Taxpayers then accept or reject the report via their portal login. Rejected reports must be resubmitted until accepted.
For taxpayers involved in international transactions, reports must be filed by October 31 of the subsequent assessment year. For all others, the same deadline applies for FY 2024–25.
Penalties for non-compliance
Failure to file a tax audit report can result in penalties under Section 271B of the Income Tax Act. The penalty is the lesser of 0.5% of total turnover, sales, or gross receipts, or ₹1,50,000. Recognised exceptions include natural calamities, resignation of auditors, labour strikes, unavailability of accounts, or the death or incapacity of the partner in charge.
Experts stress that understanding audit provisions and adhering to timelines is essential to avoid penalties and ensure smooth compliance with tax laws.
