Income Tax Audit Report Deadline: The deadline for eligible taxpayers to submit income tax audit reports on the e-filing portal is September 30, 2024, for the FY 2023-24. So, taxpayers who are required to undergo a tax audit must upload their reports before the deadline date. Therefore, missing the deadline date could lead to penalties and further delays in income tax filings.
Who Must Conduct a Tax Audit and Submit the Report by September 30, 2024
Tax audit requirements are specified in section 44AB of the Income Tax Act, 1961. According to this law, the deadline for filing the section 44AB audit report for FY 2023-24 (AY 2024-25) is September 30, 2024.
If the taxpayer is also required to submit a Transfer Pricing report in Form 3CEB, the deadline for filing the tax audit report extends to October 31, 2024.
Tax audit under section 44AB is compulsory in the following circumstances:
Business: “If the sales turnover or gross receipts from business exceed Rs 10 crores in the previous year, a tax audit is mandatory. However, this limit is reduced to Rs 1 crore if cash receipts/payments (including sales and expenses) exceed 5% of total receipts/payments.
This implies that if more than 95% of receipts and expenditures are transacted through banking channels (meaning cash receipts and expenses are less than 5% of total), the threshold for conducting a tax audit increases to Rs 10 crores.
Profession: “For specified professions, a tax audit is required when gross receipts exceed Rs 75 lakh in the preceding year. However, if cash receipts/payments surpass 5% of total receipts/payments, this limit is reduced to Rs 50 lakh.
presumptive taxation: “Taxpayers qualifying for presumptive taxation schemes (sections 44AD, 44ADA, 44AE, 44BB, or 44BBB) must also conduct a tax audit if they declare profits lower than what is mandated by these sections and their income exceeds the basic exemption limit.
Consequences of Failing to Submit a Tax Audit Report on Time
According to Basrur, tax audit compliance is mandatory, and taxpayers with specified turnover or gross receipt limits are required to have their accounts audited.
If a tax audit is not completed by the stipulated deadline, the following penalties may apply:
Penalty: Kale states, “If a tax audit is not completed on time, the tax officer may impose a penalty equal to the lesser of the following:
(a) 0.5% of the total sales, turnover, or gross receipts of the business or profession;
(b) Rs 1.5 lakh.
Though there are no explicit provisions against submitting a tax audit report after the due date, it is practically feasible to file it late.”
Defective ITR: If the tax audit report is not filed by the deadline (even by paying a penalty), the Income Tax Return (ITR) may be deemed ‘defective.’ “The date of tax audit report submission is a mandatory field in the ITR form and must be filled in at the time of filing, otherwise, the tax department may classify the return as defective.”
Taxpayers Exempt from Conducting an Income Tax Audit
The following groups of taxpayers are not obligated to conduct an income tax audit:
- Taxpayers with no business or professional income.
- Taxpayers opting for the presumptive scheme, even if their gross turnover or sales exceed the specified threshold. Basrur clarifies this with an example: In a case where a taxpayer’s gross sales total Rs 2.5 crore and cash receipts/payments exceed 5% of total, they would typically be subject to a tax audit. However, if they opt for a presumptive scheme under section 44AD, they can treat 8% of total sales as income and compute taxes based on that. In such instances, a tax audit is not mandatory.
- Taxpayers with professional income whose gross receipts do not surpass the specified limits.