Income Tax Section 44AB: Essential Guide to Income Tax Audits

Section 44AB Income Tax Audit: Income tax audit is mandatory examination of a taxpayer’s books of accounts and financial records by a Chartered Accountant to verify accuracy, compliance with income tax laws & Regulations, and proper reporting of income and expenses (I&E). Mandatory under Income Tax Section 44AB of the Income Tax Act in India, it ensures transparency and reduces tax evasion for businesses with turnover exceeding Rs. 1 crore (or Rs. 10 crore if 95% transactions are digital) and professionals with gross receipts over Rs. 50 lakhs.

Items reportable in the Tax Audit Report

Taxpayers are required to maintain books of accounts and get them audited if their gross turnover or receipts during the previous year exceed the prescribed threshold limit. The requirement to keep the books of accounts is specified under Section 44AA, and to get them audited is mentioned in Section 44AB of the Income-tax Act. The purpose of a tax audit is to ensure that the taxpayer maintains proper books of account and complies with the provisions of the Income-tax Act.

The audit report under Section 44AB shall be furnished electronically at the e-filing portal in Form No. 3CA/3CB-3CD.The tax audit report has to be furnished in the forms prescribed below:

Category of Taxpayer	Form for Audit Report	Annexure to Audit Report
If the books of account of the assessee are required to be audited under any other law	Form 3CA	Form 3CD
In any other case	Form 3CB	Form 3CD

Form No. 3CA/3CB is a format of audit report, whereas Form 3CD is a Statement of particulars required to be furnished under Section 44AB of the Income-tax Act.

The disclosure and reporting in various clauses of Form 3CD are to be done as under:

*Clauses*	*Description*
Clause 1	Clause 1 of Form No. 3CD requires the tax auditor to state the name of the assessee.
Clause 2	Clause 2 of Form No. 3CD requires the tax auditor to state the address of the assessee.
Clause 3	Clause 3 of Form No. 3CD requires the tax auditor to state the PAN or Aadhaar Number of the assessee.
Clause 4	Clause 4 of Form No. 3CD requires the tax auditor to state • Whether the assessee is liable to pay indirect tax like excise duty, service tax, sales tax, goods and services tax, customs duty, etc. • If yes, please furnish the registration number or GST number, or any other identification number allotted for the same.
Clause 5	The tax auditor is to state the “status” of the assessee against clause 5. Status here means status in accordance with the definition of ‘person’ in section 2(31) of the Act. (i.e. Individual / HUF / Firm / LLP / Company / Trust / AOP/BOI / Local Authority / Artificial Juridical Person / Co-operative Society / Co-operative Bank)
Clause 6	The tax auditor is to state the “Previous year” against clause 6.
Clause 7	The tax auditor is to state the “Assessment Year” against clause 7.
Clause 8	Clause 8 requires the tax auditor to indicate the relevant clause of section 44AB under which the audit has been conducted.
Clause 8A	Clause 8A requires the tax auditor to indicate whether the assessee has opted for taxation under Section 115BA / 115BAA / 115BAB / 115BAC / 115BAD/115BAE
Clause 9	Clause 9 applies only to firms, LLPs, Association of Persons (AOPs), and Body of Individuals (BOIs). The requirements of clause 9 are as under:Clause 9(a) – Names of partners/members of firm/LLP/AOP/BOI and their Profit Sharing RatioClause 9(b) – Changes in partners/members or their Profit Sharing Ratio
Clause 10	Clause 10 is applicable to all assessees covered under tax audit. The requirement of clause 10 is as under:Clause 10(a) – Nature of business or professionClause 10(b) – Clause 10(b) is applicable and question in clause 10(b) is to be answered as “Yes” only if • There is an addition of a new line of business/profession during the previous year; or • There is discontinuance of any business/profession during the previous year;
Clause 11	Clause 11(a) – Whether books of account are prescribed under section 44AA, if yes, list of books so prescribed.Clause 11(b) – List of books of account maintained and the address at which the books of account are kept. (In case books of account are maintained in a computer system, mention the books of account generated by such computer system. If the books of account are not kept at one location, please furnish the addresses of locations along with the details of books of account maintained at each location.)Clause 11(c) – List of books of account and nature of relevant documents examined. Clause 11(a) will apply only in respect of the assessees for whom books of account have been prescribed under section 44AA. However, Clause 11(b) and 11(c) shall apply to all assessees, whether or not they are assessees for whom books of account have been prescribed under section 44AA.
Clause 12	The following are the requirements of clause 12 : • Whether the profit and loss account includes any profits and gains assessable on presumptive basis [under sections 44AD, 44ADA, 44AE, 44AF (non-operative with effect from the assessment year 2011-12), 44B, 44BB, 44BBA, 44BBB, 44BBC , Chapter XII-G, First Schedule or Any other relevant section]? • If yes, the following information should be indicated against clause 12 : ■ The amount; and ■ The relevant section of the Income-tax Act, 1961.
Clause 13	Clause 13(a) – Method of accounting employed in the previous year.Clause 13(b) – Whether there had been any change in the method of accounting employed vis-a-vis the method employed in the immediately preceding previous year.Clause 13(c) – If the answer to (b) above is in the affirmative, give details of such change, and the effect thereof on the profit or loss.Clause 13(d) – Whether any adjustment is required to be made to the profits or loss for complying with the provisions of income computation and disclosure standards notified under section 145(2).Clause 13(e) – If the answer to (d) above is in the affirmative, give details of such adjustments.Clause 13(f) – Disclosure as per ICDS.Clauses 13(a) to (c) apply to all assessees. However, Clauses 13(d) to (f) apply only to assessees following the mercantile system of accounting as the ICDSs under section 145(2) apply only to assessees following the mercantile system of accounting.
Clause 14	Clause 14(a) requires the tax auditor to state the method of valuation of closing stock in the previous year.Clause 14(b) is applicable in case of deviation from the method of valuation prescribed under Section 145A and the effect thereof on the profit or loss.
Clause 15	Particulars of capital asset converted into stock-in-trade has to be reported against this clause. (i.e. Description of capital asset, Date of acquisition, Cost of acquisition, and Amount)
Clause 16	Clause 16 requires the tax auditor to report the items covered by sub-clauses (a) to (e) which have not been credited to the profit and loss account. The tax auditor is required to report under this clause only those items that can be found from a scrutiny of the books and other information made available for a tax audit. The tax auditor has no obligation to report those items which are outside the books of account and which cannot be found by normal audit procedures.Clause 16(a) requires the tax auditor to report items falling within the scope of section 28 which have not been credited to the profit and loss account.Clause 16(b) refers to refunds, proforma credits, and drawbacks of excise duty, customs duty, sales tax, VAT, service tax, GST, and other indirect taxes.Clause 16(c) requires the tax auditor to report ‘escalation claims’ not credited to the profit and loss account.Clause 16(d) requires the tax auditor to report ‘any other income’ not credited to the profit and loss account.Clause 16(e) requires the tax auditor to report capital receipts not credited to the profit and loss account.Here, sub-clauses (b) and (c) will not apply to an assessee following the cash basis of accounting. However, Other sub-clauses of clause 16 – sub-clauses (a), (d), and (e) will apply irrespective of the method of accounting followed by the assessee.
Clause 17	Reporting obligations under clause 17 apply when the following conditions are satisfied: ■ There is a transfer by the assessee. ■ Transfer is of land or building or both. It does not matter whether such land or building or both is held as a capital asset or stock in trade as clause 17 refers to both section 50C and section 43CA. ■ Transfer is for consideration. ■ Such consideration is less than the stamp duty value. ■ Transfer is during the previous year.
Clause 18	Clause 18 requires particulars of depreciation allowable as per the Income-tax Act, 1961 in respect of each asset or block of assets, as the case may be, in the following form:-(a) Description of asset/block of assets.(b) Rate of depreciation.(c) Actual cost of written down value, as the case may be.(ca) Adjustment made to the written down value under – (i) under the proviso to section 115BAA(3) (for assessment year 2020-21 only); (ii) under the first proviso to section 115BAC(3) or the proviso to section 115BAD(3) (for assessment year 2021-22 only); (iii) under the second proviso to section 115BAC(3) (for assessment year 2024-25 only).(cb) Adjustment made to the written down value of Intangible asset due to excluding the value of goodwill of a business or profession.(cc) Adjusted written-down value.(d) Additions/deductions during the year with dates; in the case of any addition of an asset, date put to use; including adjustments on account of – ■ Central Value Added Tax credits claimed and allowed under the Central Excise Rules, 1944, in respect of assets acquired on or after 1st March, 1994, ■ change in the rate of exchange of currency, and ■ subsidy or grant or reimbursement, by whatever name called.(e) Depreciation allowable.(f) Written down value at the end of the year.
Clause 19	Clause 19 required particulars of the amount debited to the profit and loss account and the amount admissible as per the provisions of the Income-tax Act, 1961 under Section 33AB, 33ABA, 35(1)(i), 35(1)(ii), 35(1)(iia), 35(1)(iii), 35(1)(iv), 35(2AA), 35(2AB), 35ABA, 35ABB, 35AD, 35CCA, 35CCC, 35CCD, 35D, 35DD, 35DDA, 35E, any other relevant section.
Clause 20	Clause 20(a) – Any sum paid to an employee as bonus or commission for services rendered, where such sum was otherwise payable to him as profits or dividend. [Section 36(1)(ii)]Clause 20(b) – Details of contributions received from employees for various funds as referred to in section 36(1)(va).
Clause 21	Clause 21(a) – This clause requires details of the amount debited to the profit and loss account, being in the nature of capital expenditure, personal expenditure, advertisement expenditure, etc.Clause 21(b) – Clause 21(b) sets out a format to present information of inadmissible expenses under clause (a) of section 40 sub-clause-wise.Clause 21(c) – Amounts debited to profit and loss account being, interest, salary bonus, commission, or remuneration inadmissible under section 40(b)/40(ba) and computation thereof. This clause applies only to partnership firms/Limited Liability Partnerships (LLPs)/AOPs/BOIs.Clause 21(d) – ■ Clause 21(d)(A) requires the tax auditor to state “On the basis of the examination of books of account and other relevant documents/evidence, whether the expenditure covered under section 40A(3) read with rule 6DDA were made by account payee cheque drawn on a bank or account payee bank draft”. ■ Clause 21(d)(B) of Form No.3CD requires the tax auditor to state “on the basis of the examination of books of account and other relevant documents/evidence, whether the payment referred to in section 40A(3A) read with rule 6DDA were made by account payee cheque drawn on a bank or account payee bank draft”.Clause 21(e) – This clause requires reporting of “provision for payment of gratuity not allowable under section 40A(7)“. This clause is relevant only in the context of assessees following mercantile system of accounting.Clause 21(f) – Clause 21(f) requires reporting of amounts covered by section 40A(9).Clause 21(g) – This clause requires reporting particulars of contingent liabilities.Clause 21(h) – Clause 21(h) requires reporting of “amount of deduction inadmissible in terms of section 14A on respect of expenditure incurred in relation to total income which does not form part of total income”. This clause applies to all assessees who have taxable income as well as exempt income.Clause 21(i) – clause 21(i) requires reporting of amounts inadmissible in terms of proviso to section 36(1)(iii).
Clause 22	Clause 22 requires particulars of the amount of interest inadmissible under Section 23 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 or total amount payable to micro or small enterprises under Section 15 of the MSMED Act during the previous year, along with a break-up of the amount paid within the prescribed time and the amount not paid within such time and disallowed for the year.
Clause 23	Clause 23 requires particulars of payments made to persons specified under 40A(2)(b) (i.e. Name, PAN, Relation, Nature of transaction, and Amount)
Clause 24	Clause 24 requires particulars of amounts deemed to be profits and gains under Section 32AC, 32AD, 33AB, 33ABA, or 33AC.
Clause 25	Clause 25 requires particulars of amounts deemed to be profits and gains under Section 41 and computation thereof. (i.e. Name of person, Amount of income, Section, Description of transaction, and Computation if any)
Clause 26	Clause 26 requires disclosures of sums incurred and paid which are referred to in clauses (a) to (g) [except clause (da) of section 43B(1)].Clause 26(i)(A) – Information required In respect of any sum referred to in section 43B, the liability for which pre-existed on the first day of the previous year but was not allowable in the assessment of any preceding previous year and (for clauses other than clause (h) of section 43B) was paid during the year, or not paid during the year.Clause 26(i)(B) – Information required In respect of any sum referred to in clauses (a),(b),(c),(d),(e),(f), or (g) of section 43B, the liability for which was incurred in the previous year and was paid on or before the due date for furnishing the return of income of the previous year under section 139(1), or not paid on or before the aforesaid date.Clause 26(i)(A) and Clause 26(i)(B) are relevant only for assessees following the mercantile system of accounting.
Clause 27	Clause 27(a) – Amount of Central Value Added Tax Credits/Input Tax Credit(ITC) availed of or utilized during the previous year and its treatment in profit and loss account and treatment of outstanding Central Value Added Tax Credit/Input Tax Credit(ITC) in accounts. Clause 27(a) will apply to all assessees registered under GST/Central Excise.Clause 27(b) – Particulars of income or expenditure of the prior period credited or debited to the profit and loss account. Clause 27(b) dealing with prior period items applies only to assessees following the mercantile system of accounting.
Clause 29A	Clause 29A pertains to the amount received and forfeited which is taxable u/s 56(2)(ix).
Clause 29B	Clause 29B pertains to gifts/deemed gifts received which are taxable u/s 56(2)(x). Therefore, reporting in respect of clause 29B which pertains to ‘income from other sources’ is required only to the extent entries in relation to such income are made in books of business or profession. Tax auditor is not liable to report in respect of income covered by clause 29B if no entries in relation to that are made in books of business or profession.The reporting requirement is whether any amount is to be included as income chargeable under the head ‘Income from other sources’. If the answer is ‘yes’, the details to be furnished are (i) Nature of income and (ii) Amount.
Clause 30	Clause 30 requires particulars of any amount borrowed on hundi or any amount due thereon (including interest on the amount borrowed) repaid, otherwise than through an account payee cheque. [Section 69D]
Clause 30A	Clause 30A requires particulars about whether the primary adjustment to transfer price, as referred to in sub-section (1) of section 92CE, has been made during the previous year.
Clause 30B	Clause 30B requires particulars about whether the assessee has incurred expenditure during the previous year by way of interest or of similar nature exceeding one crore rupees as referred to in sub-section (1) of section 94B.
Clause 30C	Clause 30C requires the tax auditor to report any impermissible avoidance arrangement (IAA) entered into by the assessee (auditee). Tax Auditor is required to report under clause 30C only if the following 4 ingredients are cumulatively satisfied: ■ There exists an ‘arrangement’ ■ ‘Main purpose’ or sole purpose of ‘arrangement’ is to obtain a ‘tax benefit’ ■ Such ‘Avoidance Arrangement’ is ‘Impermissible’ ■ Such arrangement for tax avoidance which is impermissible (Impermissible Avoidance Arrangement or IAA) has been ‘entered into’ or ‘carried out’ by the assessee
Clause 31	Clause 31(a) deals with the acceptance of loan or deposit in an amount exceeding the limit specified in section 269SS (i.e. Rs. 20,000). Clause 31(a) is not applicable in respect of the following assessees : ■ any banking company; ■ any corporation established by a Central, State, or Provincial Act; ■ any Government company as defined in section 617 of the Companies Act, 1956 [now section 2(45) of the Companies Act, 2013].Clause 31(b) deals with the receipt of a specified sum i.e. money receivable as advance or otherwise in relation to the transfer of immovable property whether or not the transfer takes place.Clause 31(ba) requires reporting of particulars of each receipt in an amount exceeding the limit specified in section 269ST, in aggregate from a person in a day or in respect of a single transaction or on respect of transactions relating to one event or occasion from a person, during the previous year, where such receipt is otherwise than by a cheque or a bank draft or use of ECS through a bank account.Clause 31(bb) requires reporting of particulars of each receipt in an amount exceeding the limit specified in section 269ST as above received by a cheque or bank draft not being an account payee cheque or an account payee bank draft.Clause 31(bc) requires reporting of particulars of each payment made in an amount exceeding the limit in section 269ST, otherwise than by an account payee cheque or account payee bank draft or use of ECS, during the previous year.Clause 31(bd) requires particulars of each payment exceeding the limit specified in section 269ST, made by a cheque or bank draft, not being an account payee cheque or an account payee bank draft, during the previous year.Clause 31(c) pertains to the repayment of loans/deposits/specified advances in an amount exceeding the specified limit of Section 269T.Clause 31(d) pertains to the repayment of loans/deposits/specified advances which satisfies the following conditions :i. Repayment is made during the previous yearii. Repayment is made in an amount exceeding the limit in section 269T (i.e. Rs. 20,000)iii. Mode of repayment is immaterial – it does not matter whether the mode of repayment is section 269T compliant or not.iv. Such loans/deposits/advances repaid were received in contravention of section 269SS in the previous year i.e. these were received otherwise than by specified non-cash modes.Clause 31(e) pertains to the repayment of loans/deposits/specified advances by cheque or bank draft not crossed at all or crossed without the addition of words “account payee” and which satisfy conditions (i) to (iii) above.(Particulars at (c), (d), and (e) need not be given in the case of a repayment of any loan or deposit or any specified advance taken or accepted from the Government, Government company, banking company, or a corporation established by the Central, State or Provincial Act)”.Note: The relevant code indicating the nature of the amount/receipt/repayment is also required to be specified, where applicable.
Clause 32	Clause 32(a) requires particulars of brought forward loss or depreciation allowance.Clause 32(b) requires the tax auditor to state whether a change in shareholding of the company has taken place in the previous year due to which the losses incurred prior to the previous year cannot be allowed to be carried forward in terms of section 79.Clause 32(c) requires the tax auditor to state whether the assessee has incurred any speculation loss referred to in section 73 during the previous year, if yes, then the tax auditor is required to furnish the details of the same against clause 32(c).Clause 32(d) requires the tax auditor to report whether the assessee has incurred any loss referred to in section 73A in respect of any specified business in the previous year. If so, the tax auditor shall furnish details of the same.Clause 32(e) requires the tax auditor to state whether the company is deemed to be carrying on a speculation business as referred to in Explanation to Section 73. If yes, the tax auditor should furnish the details of speculation loss if any incurred during the previous year against clause 32(e).
Clause 33	Clause 33 prescribes a tabular format for reporting admissible deductions section-wise. Clause 33 casts a duty on the tax auditor to verify whether the assessee fulfils the conditions if any specified under the relevant provisions of the Income-tax Act, 1961 or Income-tax Rules, 1962, or any other guidelines, circular, etc., issued in this behalf.
Clause 34	Clause 34(a) requires the tax auditor to state whether the assessee is required to deduct or collect tax at source, if yes, then the tax auditor is required to furnish the details of the same against clause 34(a).Clause 34(b) requires the tax auditor to state whether the assessee is required to furnish the statement of tax deducted or tax collected, if yes, then the tax auditor is required to furnish the details of the same against clause 34(b).Clause 34(c) requires the tax auditor to state Whether the assessee is liable to pay interest under section 201(1A) or section 206C(7), if yes, then the tax auditor is required to furnish the details of the same against clause 34(c).
Clause 35	Clause 35(a) requires the quantitative details of principal items of goods traded, in case of trading concern.Clause 35(b) requires the quantitative details of the principal items of raw materials, finished products, and by-products, in case of manufacturing concern.
Clause 36	This clause is redundant with effect from the assessment year 2021-22 as the Finance Act, 2020 has abolished DDT.
Clause 36A	Clause 36A requires the tax auditor to state whether the assessee has received any amount on the nature of dividend as referred to in sub-clause (e) of clause (22) of section 2, if yes, then the tax auditor is required to furnish the details of the same.
Clause 36B	Clause 36B requires the assessee to state whether any amount has been received for buyback of shares as referred to in sub-clause (f) of clause (22) of section 2, and if yes, to furnish the amount received and the cost of acquisition of the shares bought back.
Clause 37	Clause 37 requires the tax auditor to state whether any cost audit was carried out, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the cost auditor.
Clause 38	Clause 38 requires the tax auditor to state whether any audit was conducted under the Central Excise Act, 1944, if yes, give the details, if any, of disqualification or disagreement on any matter/ item/ value/ quantity as may be reported/identified by the auditor.
Clause 39	Clause 39 requires the tax auditor to state whether any audit was conducted under section 72A of the Finance Act, 1994 in relation to the valuation of taxable services, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the auditor.
Clause 40	Clause 40 requires the details regarding total turnover, gross profit/turnover, net profit/turnover, stock-in-trade/turnover, and material consumed/finished goods produced for the previous year and the preceding previous year. The details required to be furnished for principal items of goods traded or manufactured or services rendered.
Clause 41	Clause 41 requires the details of demand raised or refund issued during the previous year under any tax laws other than the Income-tax Act, 1961 and Wealth-tax Act, 1957 along with details of relevant proceedings.
Clause 42	Clause 42(a) requires the tax auditor to state whether the assessee is required to furnish a statement in Form No. 61 or Form No. 61A or Form No. 61B. If yes, then the status of furnishing the forms by the due date, whether forms contain all details required to be reported, list of required details not included in forms are to be reported in clause 42(b) in Tabular Format.
Clause 43	Clause 43 requires the tax auditor to state whether the assessee or its parent entity or alternate reporting entity is liable to furnish the report as referred to in sub-section (2) of section 286, if yes, then the tax auditor is required to furnish the details of the same.
Clause 44	Clause 44 of Form 3CD seeks details of the total expenditure incurred during the year. The break-up needs to be given for the expenditure in respect of entities registered under GST and relating to entities not registered under GST.

[As amended by Finance Act, 2025]

Summary Table

Form	Purpose	Applicable To
Form 3CA	Tax audit report	Assessee already audited under another law
Form 3CB	Tax audit report	Assessee not audited under any other law
Form 3CD	Annexure to 3CA/3CB	Detailed financial and compliance info
Form 3CE	Tax audit report	Non-residents/foreign companies receiving royalty or fees for technical services

Section 44AB of the Income Tax Act for Tax Audit

Section 44AB of the Income Tax Act, 1961, lays down the provisions related to tax audits. It specifies the conditions under which certain categories of taxpayers are required to get their accounts audited. The primary objective of this section is to ensure that taxpayers maintain accurate and complete books of accounts and financial records.

This section plays a crucial role in capturing comprehensive information regarding a taxpayer’s income, taxes, deductions, and other financial details.

Once the audit is conducted, a Chartered Accountant is responsible for preparing and submitting the audit report electronically to the Income Tax Department.

Income Tax Audit Limit

Under Section 44AB of the Income Tax Act, 1961, certain individuals and entities are required to undergo a tax audit based on their turnover, gross receipts, or other specific conditions. The primary goal is to ensure proper reporting and compliance with tax laws.

Tax Audit Applicability Based on Turnover and Receipts

Business:
- Normal Limit: Turnover exceeds ₹1 crore.
- Extended Limit: Turnover exceeds ₹10 crore if cash transactions (both receipts and payments) do not exceed 5% of total transactions.
Professionals: Gross receipts exceed ₹50 lakh.
Presumptive Taxation Scheme (Section 44AD/44ADA):
- If you claimed profits lower than 6%/8% (Business) or 50% (Profession) of turnover, and your total income exceeds the basic exemption limit.

Due Date and Penalties

Audit Due Date: September 30th of the Assessment Year.
Penalty for Non-Compliance: The lower of 0.5% of total sales/turnover/gross receipts or ₹1,50,000.

CA Audit Limit (ICAI)

A Chartered Accountant (CA) can sign a maximum of 60 tax audit reports per financial year, starting from April 1, 2026.

Important Notes

Digital Transactions: To qualify for the ₹10 crore threshold, 95% or more of receipts and payments must be through non-cash methods (bank, UPI, cheque).
5-Year Lock-in: If a business opts out of the presumptive scheme (44AD) within 5 years, they are required to get an audit if their income exceeds the exemption limit.

Summary of Income Tax Audit Limit

Type	Threshold Limit
Business (Normal)	Rs. 1 crore (Rs. 10 crore if cash transactions ≤ 5%)
Profession	Rs. 50 lakh
Presumptive Scheme	Based on lower profit declaration + exceeding the exemption limit

Income Tax Audit Last Date

For the Financial Year 2024–25 (Assessment Year 2025–26), the due dates for completing the tax audit under the Income Tax Act are as follows:

The CBDT has extended the Tax Audit Report filing deadline for Assessment Year 2025-26, giving businesses, professionals, and partnership firms extra time to comply. Originally due on 30th September 2025, the deadline is now 31st October 2025. The Income Tax Return (ITR) filing deadline for taxpayers requiring an audit remains 31st October 2025.

Penalty for Non Filing or Delay Filing Tax Audit Report

If any taxpayer is required to get the tax audit done but fails to do so, the least of the following may be levied as a fee:

0.5% of the total sales, turnover, or gross receipts, or
Rs 1,50,000

However, if there is a reasonable cause of such failure, no fees shall be levied under section 271B. As proposed in Budget 2026 this will now be treated as a fee and not penalty.

So far, the reasonable causes that are accepted by Tribunals/Courts for delay in filing tax audit reports are:

Natural Calamities
Resignation of the Tax Auditor and Consequent Delay
Resignation of Accountant/key employees.
Labour problems such as strikes, lock-outs for an extended period
Loss of Accounts because of situations beyond the control of the Assesses
Physical inability or death of the partner in charge of the accounts

Important FAQs

What is an income tax audit under Section 44AB?

Tax audit under section 44AB is an audit conducted by a chartered accountant to verify the books of accounts and other documents of the assessee. It is applicable to individuals, HUFs, firms, etc. with gross receipts exceeding Rs 1 crore in business or Rs 50 lakhs in profession. The purpose is to authenticate the accounts, verify compliance with income tax provisions, and submit a tax audit report with the Income Tax Return.

What is the last date for the income tax audit?

The last date for filing the income tax audit for the FY 2025-26 is 30th September 2026.

What documents are audited under Section 44AB?

The CA audits the books of accounts like the cash book, ledger, journals, bank statements, stock records, and sales/purchase invoices. Authenticates the state of affairs of business as on the last date of the financial year.

What are the consequences of not getting a tax audit done?

If a tax audit is applicable but not conducted, it attracts penal consequences under Section 271B. The Assessing Officer can levy a penalty of Rs 1.5 lakh or 0.5% of turnover, which is lower. Prosecution can also be initiated. Non-submission of audit reports makes the return defective, and provisions for faulty returns apply.

Can a salaried individual be subject to a tax audit?

Tax audits for salaried persons are generally not subject to a tax audit. However, if one has income from any other source, like professional fees exceeding Rs 50 lakhs or business income exceeding Rs 1 crore, then in that case tax audit may be applicable. Having turnover/gross receipts from business/profession exceeding the limits makes one liable for a tax audit.

What is Form 3CA-3CD?

Form 3CA is the tax audit report filed by the Chartered Accountant. It certifies that the audit was conducted as per the provisions of Section 44AB. Form 3CD is the statement of particulars in a prescribed format that needs to be submitted along with the Return and Form 3CA. It provides details of deductions claimed, compliance, etc.

Who can conduct a tax audit under Section 44AB?

Only a Chartered Accountant holding a valid Certificate of Practice (COP) can conduct a tax audit as per Section 44AB as per Section 288(2).

If a person is required to get its account audited under any other law, then is it compulsory to get the accounts audited under Section 44AB also?

As mentioned above, the taxpayer need not get his accounts audited again for income tax purposes. It is sufficient if accounts are audited under such other law before the due date of filing the return. The taxpayer can furnish this prescribed audit report under Income tax law.

What is the turnover limit for the applicability of income tax audits to businesses?

Turnover limit for applicability of tax audits to businesses is Rs. 1 crore. However, the limit should be increased to Rs. 10 crores if the cash receipts / cash payments does not exceed 5% of the total receipts / total payments.

What is the due date for furnishing of tax audit report in case of applicability of transfer pricing report u/s92E?

In that case, the due date for furnishing tax audit report is 31st October of the Assessment year.

AY 2025-26 Income Tax Audit Changes

The 2025 Tax Audit Mandate: Navigating Legislative Reforms and Enhanced Digital Compliance (Assessment Year 2025-26)

I. Executive Summary: The Paradigm Shift in Compliance for AY 2025-26

The Assessment Year (AY) 2025-26, corresponding to the Financial Year (FY) 2024-25, marks a critical inflexion point in India’s tax compliance environment. This period is characterized by substantial legislative and regulatory amendments designed to deepen the integration of digital data, enforce social policy objectives, and refine existing audit procedures. The compliance mandate for this year stems primarily from the Finance Act, 2025, and the procedural enhancements introduced through the Income-tax (Eighth Amendment) Rules, 2025.

The Central Board of Direct Taxes (CBDT) and the Institute of Chartered Accountants of India (ICAI) have acknowledged this period of transition. The ICAI, recognizing the operational necessity for clarity amid continuous legislative adjustments, has issued the Revised Guidance Note on Tax Audit under Section 44AB (2025 Edition) to assist professionals in adapting to the changes in interpretational and procedural requirements. These efforts highlight the core regulatory drivers shaping the 2025 audit landscape: the continued push for simplification and reduction of litigation, as previewed by the forthcoming Income Tax Bill (ITB) 2025, and a pronounced effort to increase revenue visibility through the alignment of Income Tax, Goods and Services Tax (GST), and e-invoicing data.

The major compliance imperatives for AY 2025-26 include a procedural adjustment via the deadline extension, significant structural overhauls in reporting, and a stringent focus on digital data alignment. First, the CBDT provided relief by extending the due date for the Tax Audit Report (TAR). Second, critical amendments were made to Form 3CD, notably the rigorous reporting structure for Micro, Small, and Medium Enterprise (MSME) payments under revised Clause 22, and the introduction of Clause 36B for taxing share buybacks at the shareholder level. Third, businesses must now ensure mandatory reconciliation of their reported turnover with GST figures and align transactional data with their Annual Information Statement (AIS) records, signaling a shift toward real-time digital scrutiny.

II. The Statutory Mandate: Applicability and Enhanced Thresholds (Section 44AB)

Section 44AB of the Income-tax Act, 1961, governs the requirement for a mandatory tax audit, which is conducted by a Chartered Accountant using Forms 3CA, 3CB, and 3CD.⁹ The applicability thresholds for AY 2025-26 reflect the government’s consistent strategy of encouraging digital transactions by offering higher exemption limits conditional on minimal cash usage.

2.1. Standard and Enhanced Turnover Limits for Businesses

For assessees engaged in business, the standard statutory threshold mandating a tax audit remains Rs. 1 crore. However, the legislation provides a significant enhanced threshold aimed specifically at incentivizing digital transactions. The turnover limit is increased substantially to Rs. 10 crore if two specific conditions related to cash transactions are met:

Aggregate cash receipts during the previous year must not exceed 5% of the total turnover or gross receipts.
Aggregate cash payments during the previous year must not exceed 5% of the total payments.

This structure establishes a rigorous digital discipline. A fundamental understanding of this regulatory design reveals that the expansion of the audit threshold to Rs. 10 crore is not merely a gesture of relief but a deliberate mechanism to enforce robust digital record-keeping. The tax authority is exchanging a generous increase in the threshold for a guaranteed, verifiable digital trail of 95% of the business’s economic activity through banking and digital infrastructure. Consequently, a failure to adhere strictly to the less than 5% cash transaction rule immediately pushes the taxpayer back to the significantly more restrictive Rs. 1 crore limit, drastically increasing their compliance burden and audit exposure.

2.2. Audit Requirements for Professionals and Presumptive Taxation Schemes

Professionals, including Chartered Accountants, Doctors, Engineers, and others specified under the relevant income tax rules, are mandated to undergo a tax audit if their gross receipts exceed Rs. 50 lakh.

The presumptive taxation schemes under Section 44AD (for small businesses) and Section 44ADA (for specified professionals) also reflect the push for digitalization, leading to enhanced limits for the financial year.

2.2.1. Presumptive Limits for Small Businesses (Section 44AD)

Under Section 44AD, the standard turnover limit remains Rs. 2 crore, where income is estimated at 8% of turnover. However, the limit for businesses is increased to Rs. 3 crore if the cash receipts do not exceed 5% of the total turnover, allowing the taxpayer to report a lower minimum profit of 6% on the digital turnover.

2.2.2. Presumptive Limits for Professionals (Section 44ADA)

Similarly, for professionals, the standard presumptive limit remains Rs. 50 lakh. This limit is increased to Rs. 75 lakh if the total amount received in cash during the previous year does not exceed 5% of the total gross receipts. This increase, revised previously by the Budget, encourages the adoption of digital modes of receiving payments by professionals.

2.2.3. Mandatory Audit Trigger upon Opting Out

A critical compliance trigger exists for assessees utilizing the presumptive schemes. If a taxpayer opts for presumptive taxation under Section 44AD or 44ADA and subsequently opts out of the scheme in any of the next five assessment years, they become ineligible to claim the benefit of presumptive taxation for the subsequent five assessment years. Furthermore, if their total income exceeds the basic exemption limit during this opt-out period, they are statutorily required to maintain books of accounts and undergo a mandatory tax audit under Section 44AB.¹⁰ This provision ensures continuity and discourages opportunistic switching between compliance regimes.

The structural relationship between the high turnover limits (Rs. 10 crore for 44AB, Rs. 3 crore for 44AD) and the condition of minimal cash usage (less than 5%) indicates a systemic legislative design. The tax framework is explicitly leveraged to compel businesses toward full digitalization. For taxpayers to qualify for the higher thresholds, they must establish accounting practices that allow for granular, verifiable reporting of all digital transactions. If a business fails to prove the requisite 95% digital transaction ratio, the system immediately imposes the restrictive lower threshold, thereby maximizing the chances of the business either being audited or subject to increased scrutiny by the tax officer.

III. Procedural Compliance and Deadline Management for AY 2025-26

The filing cycle for AY 2025-26 has been marked by a significant procedural relief granted by the CBDT, which acknowledged the complexities arising from new reporting requirements and infrastructural challenges cited by professional associations.

3.1. The CBDT Deadline Extension

The CBDT formally extended the deadline for furnishing the Tax Audit Report (TAR) for the Previous Year 2024-25 (AY 2025-26). The due date was moved from the usual September 30 to October 31, 2025.⁵ This extension applies to assessees referenced in clause (a) of Explanation 2 to sub-section (1) of section 139 of the Act—essentially, all taxpayers required to furnish an audit report under the Income-tax Act.

The relief followed multiple representations from professional bodies, including Chartered Accountant associations, which highlighted operational challenges, technical glitches on the e-filing portal, and disruption caused by natural calamities.⁵ While the CBDT maintained that the e-filing portal remained “stable and fully functional,” the grant of the extension confirmed that the primary pressure point was the complexity and timing of integrating the newly notified compliance requirements, particularly the necessary procedural re-engineering required for the revised Form 3CD clauses.

The delayed release of utilities and schemas for complex ITR forms, such as ITR-5 (used by firms, LLPs, AOPs, and BOIs), further curtailed the effective window available for preparation, review, and filing, necessitating additional time for taxpayers and auditors to adapt to the new reporting structures and detailed disclosures.

3.2. Other Key Deadlines and Forms

The October 31, 2025, extended deadline applies concurrently to the filing of the Income Tax Return for all assessees who are required to obtain a tax audit report.¹⁰ This includes entities filing ITR-5 (firms, LLPs, AOP, BOI) and ITR-7 (Trusts, institutions, political parties).

A separate deadline applies to taxpayers involved in international or specified domestic transactions. The due date for furnishing the Transfer Pricing Report under Section 92E remains November 30, 2025, for AY 2025-26.

3.3. Consequences of Default

Compliance with the extended deadline is mandatory, as failure to furnish the tax audit report on or before October 31, 2025, attracts severe financial consequences under Section 271B of the Income-tax Act.

The penalty imposed for late filing is calculated as 0.5% of the total turnover or gross receipts, subject to an upper limit of Rs. 1.5 lakhs. Taxpayers can only avoid this penalty if they can successfully demonstrate ‘reasonable cause’ for the delay, such as a serious illness, natural disaster, or verified technical breakdowns. This potential penalty underscores the necessity of prioritizing the audit process well ahead of the specified due date.

The key compliance deadlines for the assessment cycle are summarized below:

Table 1: Key Compliance Deadlines (AY 2025-26)

Compliance Requirement	Relevant Section	Revised Due Date	Original Due Date
Tax Audit Report Filing (Form 3CD, 3CA/3CB)	Section 44AB	October 31, 2025	September 30, 2025
Income Tax Return Filing (for Audit Cases)	Section 139(1)	October 31, 2025	September 30, 2025
Transfer Pricing Report Filing	Section 92E	November 30, 2025	November 30, 2025

IV. Comprehensive Analysis of Form 3CD Amendments (Income-tax (Eighth Amendment) Rules, 2025)

The most significant changes impacting the operational aspects of tax audits for AY 2025-26 are contained within the amendments to Form 3CD, the core document for reporting the findings of a tax audit. These changes, introduced through the Income-tax (Eighth Amendment) Rules, 2025, effective April 1, 2025, significantly enhance disclosure obligations, focusing on corporate governance, social compliance, and revenue verification.

4.1. Enhanced Reporting on MSME Payments (Revised Clause 22) and Section 43B(h)

The revision to Clause 22 introduces a complex and mandatory enhanced disclosure framework concerning payments made to Micro and Small Enterprises (MSMEs) under the MSME Development Act, 2006. This is arguably the most operationally challenging compliance requirement this year, as it integrates social policy enforcement directly into the tax audit structure.

4.1.1. Scope of Disclosure

The revised Clause 22 mandates a comprehensive breakdown of payments to MSMEs, moving significantly beyond previous reporting requirements where only delayed interest was potentially subject to disclosure. Taxpayers must now provide the total amount paid to MSMEs during the previous financial year, regardless of the timing, and must clearly distinguish between:

Payments made within the statutory time frame (15 days without a written agreement, or up to 45 days with a written agreement, as prescribed under Section 15 of the MSMED Act).
Payments that exceeded this prescribed timeframe.

The specific information required includes the total amount payable to MSMEs under Section 15 of the MSMED Act, and crucially, the amount of interest that cannot be claimed as a deduction under Section 23 of the MSMED Act due to delayed payments.

4.1.2. Inadmissibility of Expenses under Section 43B(h)

The disclosure requirement is critical because of its direct link to Section 43B(h) of the Income-tax Act. Section 43B(h) mandates the disallowance of the principal expenditure amount payable to a Micro or Small Enterprise if the payment is delayed beyond the statutory limit specified under the MSMED Act. The implication is that if an expense related to goods or services purchased from an MSME vendor is not paid within the prescribed 15/45-day window by the end of the financial year (or by the tax return due date, as previously interpreted for other 43B clauses), that expense is disallowed in the current year.

Disallowed expenses are not permanently lost; they are permitted as deductions only in the financial year in which the actual payment is eventually made.²¹ For example, if an invoice dated in March 2025 is paid in June 2025, and the payment exceeds the 45-day limit, the expense is disallowed in FY 2024-25 and allowed only in FY 2025-26.²¹ Furthermore, any interest paid on overdue amounts to Micro and Small Enterprises is permanently non-deductible as a business expense under Section 23 of the MSMED Act, leading to a mandatory disallowance under Section 43B.

4.1.3. Structural Enforcement via the Tax Audit

This revision transforms Form 3CD into an active compliance and enforcement instrument for government policy outside the Income Tax Act. The legislative approach leverages the punitive framework of the Income Tax Act (specifically the Section 43B(h) disallowance and the penalty under 271B for incomplete disclosure) to ensure payment discipline towards the MSME sector.

The tax auditor’s role is thus expanded to include an involuntary supply chain compliance audit. The auditor must form an opinion on the disallowability of these payments, necessitating the maintenance of detailed, verifiable vendor master data by the assessee, including the vendor’s UDYAM registration status and the agreed-upon payment terms, to correctly determine the 15-day or 45-day deadline for every transaction. Taxpayers face the dual risk of an immediate increase in taxable income due to mandatory 43B(h) disallowances, compounded by the possibility of penalties for inaccurate reporting in Form 3CD.

Table 2: Practical Checklist for MSME Payment Disallowance under Section 43B(h)

Condition	Statutory Time Limit for Payment	Tax Treatment for FY 2024-25	Form 3CD Reporting
No written agreement with MSME supplier	15 days from acceptance/deemed acceptance	Deduction allowed only if paid within 15 days or by Oct 31, 2025 (Audit Report Due Date).	Must be reported in Clause 22 if delayed.
Written agreement with MSME supplier	Up to 45 days from acceptance/deemed acceptance	Deduction allowed only if paid within the agreed period or by Oct 31, 2025.	Must be reported in Clause 22 if delayed.
Payment made after the statutory/agreed date (e.g., March 2025 invoice paid June 2025)	Exceeded Limit	Disallowed in FY 2024-25; allowed only in the year of actual payment (FY 2025-26).	Must be reported as disallowed amount under 43B(h) in Clause 22.

4.2. Buyback of Shares and Shareholder Reporting (New Clause 36B)

The Finance Act, 2025, introduced a change reclassifying the buyback of shares by a company from the corporate Distributed Income Tax (DIT) framework to a system where the income is taxed directly in the hands of the shareholder, similar to dividend income.

To support this new tax mechanism, a specific new reporting requirement, Clause 36B, has been inserted into Form 3CD. This clause is required to be filled out by the assessee (the shareholder) whose shares were repurchased by the issuing company. The required disclosure mandates reporting the amount received by the shareholder on account of the buyback and the associated cost of acquisition of those shares. This ensures that the tax department captures the necessary granular data to verify the correct computation of the shareholder’s income under Section 2(22)(f) and subsequent tax liability.

4.3. Reporting of Regulatory Compliance Costs (Revised Clause 21)

A specific amendment has been made to Clause 21(a) requiring the detailed reporting of expenditure incurred to settle proceedings initiated in relation to contraventions under certain laws notified by the Central Government. This expenditure may include professional fees and incidental costs related to the settlement.

The primary legislative purpose behind this disclosure is to enable the Assessing Officer to efficiently verify the admissibility of such expenses. Generally, expenditure incurred due to a breach of law is not considered an expense incidental to normal trade and is therefore disallowed. By mandating disclosure in Form 3CD, the tax department streamlines the process of identifying and denying deductions for such non-compliant costs.

4.4. Form Rationalization and Procedural Easing

The amendments also included measures aimed at modernizing and simplifying the compliance process. Obsolete clauses related to defunct deduction provisions, such as Sections 32AC, 32AD, 35AC, and 35CCB, have been officially deleted from Form 3CD, streamlining the reporting to align with current provisions of the Income-tax Act.

Furthermore, procedural flexibility has been introduced for smaller taxpayers. Individual taxpayers and Hindu Undivided Families (HUFs) can now authenticate Form 3CB-3CD using the Electronic Verification Code (EVC), thereby reducing the previous mandatory dependence on Digital Signature Certificates (DSCs) for verification.

V. The Digital Compliance Ecosystem: Reconciliation and Enhanced Scrutiny

The 2025 audit cycle is characterized by the mandatory convergence of data across diverse government digital platforms. The era of siloed compliance, where income tax data could exist independently of GST or e-invoicing records, is rapidly concluding. This convergence makes rigorous data reconciliation the highest priority for audit preparedness.

5.1. Mandatory Reconciliation with GST Data (Clause 44)

Clause 44 of Form 3CD mandates a break-up of total expenditure into categories relevant from a GST perspective, such as expenditure relating to exempt goods/services, payments to entities under the Composition Scheme, and payments to entities not registered under GST.

More broadly, tax auditors are now expected to perform a mandatory and detailed reconciliation between the turnover reported in the financial statements and Form 3CD and the turnover figures reported in the Goods and Services Tax returns. This alignment is critical because any material mismatch between the two systems automatically heightens the risk profile of the taxpayer, making them susceptible to automated scrutiny notices.

5.2. Impact of E-Invoicing Mandates and Real-Time Reporting

The convergence of Income Tax and GST compliance is further tightened by the expansion of e-invoicing mandates. Effective April 1, 2025, the government implemented a strict 30-day time limit for reporting e-invoices, credit notes, and debit notes on the Invoice Registration Portal (IRP).²⁸ This mandate applies specifically to taxpayers with an Annual Aggregate Turnover (AATO) of Rs. 10 crores and above.

This requirement is intrinsically linked to the tax audit framework. Taxpayers operating above the enhanced audit threshold of Rs. 10 crore under Section 44AB are often the same entities subject to the Rs. 10 crore AATO e-invoicing mandate. The rigid 30-day reporting window for the IRP creates a near real-time, tamper-proof record of revenue transactions verified by the GST network.

In this context, the tax audit requires verification that the dates and values of revenue recognition in the financial books align perfectly with the digital data filed on the IRP. The tax department is expected to utilize this IRP data as the primary source of truth for turnover. Any attempt to modify revenue recognition values or dates in the books for income tax purposes—for instance, to manage the timing of expenses or income—will be immediately contradicted by the already-filed IRP data, leading to targeted audit action. This regulatory architecture signifies that data consistency across government platforms is now the paramount compliance standard.

5.3. Digital Validation through AIS and Form 26AS

The increased digitalization also mandates robust digital validation. Taxpayers and auditors must perform thorough reconciliation of financial data reported in Form 3CD with the information contained in the Annual Information Statement (AIS) and Form 26AS.⁴ These documents capture transactional data reported by third parties (such as banks, TDS deductors, and other specified entities).

Technical glitches and errors in the pre-filled data or discrepancies within AIS/26AS have been cited by professional bodies as a recurring challenge, contributing to the pressure for deadline extensions.¹⁷ Nevertheless, the responsibility remains with the taxpayer and auditor to reconcile these differences and provide supporting documentation for any deviation, as unexplained inconsistencies are primary triggers for official scrutiny.

VI. Advisory and Risk Management for Tax Professionals

The confluence of legislative amendments and technological convergence elevates the complexity and risk profile of the 2025 tax audit. Professional advisors must fundamentally shift their auditing methodologies and recommend corresponding changes in client internal controls.

6.1. Reliance on the ICAI Guidance Note

The Revised Guidance Note on Tax Audit under Section 44AB (2025 Edition) released by the ICAI’s Direct Taxes Committee serves as an essential resource for professionals.¹ This document comprehensively incorporates the legislative changes introduced by the Finance Acts of 2024 and 2025, providing interpretational clarity on the new reporting requirements and compliance timelines. Practitioners are advised to align their audit procedures strictly with this updated guidance to ensure full statutory compliance.

6.2. Strategic Risk Mitigation Checklist

Businesses and their financial advisors must adopt a proactive strategy focusing on granular data management and stringent verification protocols to mitigate significant penalties and disallowances:

MSME Compliance Framework: Given the profound impact of Section 43B(h), businesses must move beyond simple invoice tracking. They need to implement robust, possibly automated, systems capable of continuously verifying the UDYAM registration status of all vendors and tracking every invoice against the 15-day or 45-day statutory payment term. This system must provide real-time reporting of potential Section 43B(h) disallowances well before the end of the financial year to allow corrective action.
Integrated Data Reconciliation Protocol: A rigorous protocol must be established to ensure that data reported in Form 3CD, GST returns (including IRP data), and the Income Tax e-filing portal (AIS/26AS data) is mutually consistent. This internal control is necessary to preempt automated audit queries triggered by digital discrepancies.
Meticulous Documentation and Audit Preparedness: Proper documentation remains the bedrock of audit readiness. Businesses must organize and store all financial records, including those related to related-party transactions, loans, advances, virtual digital assets (VDAs), and detailed backup for expenses that may fall under the new reporting mandates, ensuring clear explanations for all tax positions.

6.3. Common Pitfalls that Trigger Notices

Auditors must be particularly vigilant against common errors identified through enhanced digital scrutiny:

GST Reconciliation Mismatch: Any substantial inconsistency between the turnover reported in Clause 44 of Form 3CD and the figures reported in GSTR-3B or GSTR-1 filings significantly elevates the audit risk.
Section 43B(h) Non-Compliance: Failure to correctly identify and report the mandated disallowances for delayed payments to MSMEs under Clause 22 guarantees an adverse finding during assessment.
AIS/26AS Discrepancies: Unreconciled differences between income and expenditure details reported in Form 3CD and the pre-populated data in AIS/26AS (especially regarding TDS/TCS credits) are primary indicators of inaccurate reporting.
Incomplete Reporting in High-Risk Clauses: Partial or inaccurate reporting concerning complex items like related-party transactions, loans and advances, or new items like share buybacks (Clause 36B) can lead to intensified investigation.

VII. Future Legislative Outlook: The Income Tax Bill, 2025

While the compliance requirements for AY 2025-26 are governed by the amended Income-tax Act, 1961, the tabling of the Income Tax Bill (ITB) 2025 signifies the government’s commitment to a streamlined legislative future, which professionals must track closely.

7.1. Intent and Status of the ITB 2025

The ITB 2025 was introduced with the stated objective of making the income tax law simple, straightforward, and reducing litigation by rationalizing language and removing redundant provisions. The Bill incorporates all substantive policy changes proposed in the Finance Bill 2025, ensuring alignment on definitions, computation, and assessment provisions.

The strategic intent behind the detailed compliance requirements implemented in Form 3CD for AY 2025-26 should be understood in light of this future reform. The mandatory granular reporting of specific data points—such as MSME payment timelines, GST consistency, and details of share buybacks—is necessary to gather the robust, pre-audited digital records required to facilitate a successful transition to the anticipated simplified, technology-driven framework of the ITB 2025.

7.2. Replacement of Section 44AB

The existing tax audit requirements under Section 44AB are proposed to be replaced by Clause 63 in the ITB 2025 Clause 63 largely retains the current approach to thresholds, emphasizing digitalization: mandatory audit for businesses with turnover over Rs. 10 crore if 95% of transactions are digital, and Rs. 1 crore otherwise; and for professionals with receipts over Rs. 50 lakh. This confirms that the focus on digital transactions and transparency, enforced vigorously in the current audit cycle, will be a permanent structural feature of the future tax code.

The comprehensive changes introduced in Form 3CD are summarized in the table below:

Table 3: Summary of Key Amendments to Form 3CD (Applicable from April 1, 2025)

Clause Number	Subject Matter	Nature of Amendment	Compliance Impact
Section 44AB	Audit Thresholds	Clarified high turnover limits (Rs. 10 Cr) conditional on cash transactions ≤ 5%.	Demands verifiable proof that 95% of transactions are digital.
Clause 22 (Revised)	Payments to MSMEs	Mandates detailed breakdown of timely vs. delayed principal and interest payments.	Enforces Section 43B(h); requires MSME vendor registration verification and tracking.
Clause 36B (New)	Buyback of Shares	Requires reporting of amount received and cost of acquisition by the shareholder.	Captures data for taxing buybacks as deemed dividends in the shareholder’s hands.
Clause 21 (Revised)	Regulatory Expenses	Mandates reporting of expenditure on legal settlements/contraventions.	Facilitates verification of the admissibility of expenses related to breaches of law.
Clause 44 (Implicit)	GST Reconciliation	Mandatory reconciliation of turnover and expenditure with GST returns/IRP data.	Alignment of Income Tax and GST reporting is critical for automated scrutiny avoidance.
N/A	Verification	EVC verification enabled for Individuals and HUFs for Forms 3CB/3CD.	Simplifies the e-filing procedure for non-corporate taxpayers.

VIII. Conclusion: Preparing for an Integrated Compliance Future

The 2025 tax audit cycle is defined by an unprecedented push towards integrated digital compliance and the enforcement of socio-economic policies through the tax structure. The central tenet of the reforms is that high thresholds and procedural relief are granted only in exchange for guaranteed, high-integrity digital data.

The meticulous new requirements in Form 3CD, particularly Clause 22 related to MSME payments, signal that the tax audit is no longer confined to traditional financial verification but has expanded to encompass supplier payment discipline and other aspects of corporate governance. The convergence of the high-turnover audit limit (Rs. 10 crore) with the e-invoicing mandate (AATO > Rs. 10 crore) establishes a robust digital verification loop. This necessitates that businesses maintain absolute consistency between their IRP/GST submissions, their financial books, and their Form 3CD filing.

To navigate this landscape successfully, businesses must treat the tax audit process not as an end-of-year activity but as a year-round operational mandate. CFOs and corporate tax heads must prioritize updating their Enterprise Resource Planning (ERP) and accounting systems to automatically track MSME compliance and generate reconciliation reports. Only through the adoption of a holistic, digitally aligned compliance strategy can businesses mitigate the heightened risks of tax disallowances under Section 43B(h) and penalties under Section 271B, thus ensuring stability and sustainable growth in the evolving digital tax regime.

AY 2025-26 Tax Audit Changes

The 2025 Tax Audit Mandate: Navigating Legislative Reforms and Enhanced Digital Compliance (Assessment Year 2025-26)

I. Executive Summary: The Paradigm Shift in Compliance for AY 2025-26

II. The Statutory Mandate: Applicability and Enhanced Thresholds (Section 44AB)

2.1. Standard and Enhanced Turnover Limits for Businesses

Aggregate cash receipts during the previous year must not exceed 5% of the total turnover or gross receipts.
Aggregate cash payments during the previous year must not exceed 5% of the total payments.

2.2. Audit Requirements for Professionals and Presumptive Taxation Schemes

2.2.1. Presumptive Limits for Small Businesses (Section 44AD)

2.2.2. Presumptive Limits for Professionals (Section 44ADA)

2.2.3. Mandatory Audit Trigger upon Opting Out

III. Procedural Compliance and Deadline Management for AY 2025-26

3.1. The CBDT Deadline Extension

3.2. Other Key Deadlines and Forms

3.3. Consequences of Default

The key compliance deadlines for the assessment cycle are summarized below:

Table 1: Key Compliance Deadlines (AY 2025-26)

Compliance Requirement	Relevant Section	Revised Due Date	Original Due Date
Tax Audit Report Filing (Form 3CD, 3CA/3CB)	Section 44AB	October 31, 2025	September 30, 2025
Income Tax Return Filing (for Audit Cases)	Section 139(1)	October 31, 2025	September 30, 2025
Transfer Pricing Report Filing	Section 92E	November 30, 2025	November 30, 2025

IV. Comprehensive Analysis of Form 3CD Amendments (Income-tax (Eighth Amendment) Rules, 2025)

4.1. Enhanced Reporting on MSME Payments (Revised Clause 22) and Section 43B(h)

4.1.1. Scope of Disclosure

Payments made within the statutory time frame (15 days without a written agreement, or up to 45 days with a written agreement, as prescribed under Section 15 of the MSMED Act).
Payments that exceeded this prescribed timeframe.

4.1.2. Inadmissibility of Expenses under Section 43B(h)

4.1.3. Structural Enforcement via the Tax Audit

Table 2: Practical Checklist for MSME Payment Disallowance under Section 43B(h)

Condition	Statutory Time Limit for Payment	Tax Treatment for FY 2024-25	Form 3CD Reporting
No written agreement with MSME supplier	15 days from acceptance/deemed acceptance	Deduction allowed only if paid within 15 days or by Oct 31, 2025 (Audit Report Due Date).	Must be reported in Clause 22 if delayed.
Written agreement with MSME supplier	Up to 45 days from acceptance/deemed acceptance	Deduction allowed only if paid within the agreed period or by Oct 31, 2025.	Must be reported in Clause 22 if delayed.
Payment made after the statutory/agreed date (e.g., March 2025 invoice paid June 2025)	Exceeded Limit	Disallowed in FY 2024-25; allowed only in the year of actual payment (FY 2025-26).	Must be reported as disallowed amount under 43B(h) in Clause 22.

4.2. Buyback of Shares and Shareholder Reporting (New Clause 36B)

4.3. Reporting of Regulatory Compliance Costs (Revised Clause 21)

4.4. Form Rationalization and Procedural Easing

V. The Digital Compliance Ecosystem: Reconciliation and Enhanced Scrutiny

5.1. Mandatory Reconciliation with GST Data (Clause 44)

5.2. Impact of E-Invoicing Mandates and Real-Time Reporting

5.3. Digital Validation through AIS and Form 26AS

VI. Advisory and Risk Management for Tax Professionals

6.1. Reliance on the ICAI Guidance Note

6.2. Strategic Risk Mitigation Checklist

Businesses and their financial advisors must adopt a proactive strategy focusing on granular data management and stringent verification protocols to mitigate significant penalties and disallowances:

MSME Compliance Framework: Given the profound impact of Section 43B(h), businesses must move beyond simple invoice tracking. They need to implement robust, possibly automated, systems capable of continuously verifying the UDYAM registration status of all vendors and tracking every invoice against the 15-day or 45-day statutory payment term. This system must provide real-time reporting of potential Section 43B(h) disallowances well before the end of the financial year to allow corrective action.
Integrated Data Reconciliation Protocol: A rigorous protocol must be established to ensure that data reported in Form 3CD, GST returns (including IRP data), and the Income Tax e-filing portal (AIS/26AS data) is mutually consistent. This internal control is necessary to preempt automated audit queries triggered by digital discrepancies.
Meticulous Documentation and Audit Preparedness: Proper documentation remains the bedrock of audit readiness. Businesses must organize and store all financial records, including those related to related-party transactions, loans, advances, virtual digital assets (VDAs), and detailed backup for expenses that may fall under the new reporting mandates, ensuring clear explanations for all tax positions.

6.3. Common Pitfalls that Trigger Notices

Auditors must be particularly vigilant against common errors identified through enhanced digital scrutiny:

GST Reconciliation Mismatch: Any substantial inconsistency between the turnover reported in Clause 44 of Form 3CD and the figures reported in GSTR-3B or GSTR-1 filings significantly elevates the audit risk.
Section 43B(h) Non-Compliance: Failure to correctly identify and report the mandated disallowances for delayed payments to MSMEs under Clause 22 guarantees an adverse finding during assessment.
AIS/26AS Discrepancies: Unreconciled differences between income and expenditure details reported in Form 3CD and the pre-populated data in AIS/26AS (especially regarding TDS/TCS credits) are primary indicators of inaccurate reporting.
Incomplete Reporting in High-Risk Clauses: Partial or inaccurate reporting concerning complex items like related-party transactions, loans and advances, or new items like share buybacks (Clause 36B) can lead to intensified investigation.

VII. Future Legislative Outlook: The Income Tax Bill, 2025

7.1. Intent and Status of the ITB 2025

7.2. Replacement of Section 44AB

The comprehensive changes introduced in Form 3CD are summarized in the table below:

Table 3: Summary of Key Amendments to Form 3CD (Applicable from April 1, 2025)

Clause Number	Subject Matter	Nature of Amendment	Compliance Impact
Section 44AB	Audit Thresholds	Clarified high turnover limits (Rs. 10 Cr) conditional on cash transactions ≤ 5%.	Demands verifiable proof that 95% of transactions are digital.
Clause 22 (Revised)	Payments to MSMEs	Mandates detailed breakdown of timely vs. delayed principal and interest payments.	Enforces Section 43B(h); requires MSME vendor registration verification and tracking.
Clause 36B (New)	Buyback of Shares	Requires reporting of amount received and cost of acquisition by the shareholder.	Captures data for taxing buybacks as deemed dividends in the shareholder’s hands.
Clause 21 (Revised)	Regulatory Expenses	Mandates reporting of expenditure on legal settlements/contraventions.	Facilitates verification of the admissibility of expenses related to breaches of law.
Clause 44 (Implicit)	GST Reconciliation	Mandatory reconciliation of turnover and expenditure with GST returns/IRP data.	Alignment of Income Tax and GST reporting is critical for automated scrutiny avoidance.
N/A	Verification	EVC verification enabled for Individuals and HUFs for Forms 3CB/3CD.	Simplifies the e-filing procedure for non-corporate taxpayers.

VIII. Conclusion: Preparing for an Integrated Compliance Future

Deadline for Tax Audit Reports Extended by Rajasthan High Court

Rajasthan High Court has extended the deadline for filing the Tax Audit Report by one month. A division bench of Justice (Dr.) Pushpendra Singh Bhati and Justice Bipin Gupta at the Rajasthan High Court extended the deadline under Section 44AB of the Income Tax Act, 1961, by 1 (one) month beyond September 30, 2025.

The order was given in the background of a PIL filed by the Tax Bar Association, Bhilwara, seeking an extension.

It was submitted that in the previous years, CBDT had consistently granted such extensions in similar circumstances, and refusal to grant the same in the present situation was arbitrary, unreasonable, and a violation of Articles 14, 19(1)(g) and 21 of the Constitution of India.

It was further argued that the introduction of revised reporting formats for non-corporate entities required additional time, and the absence of such extension would unjustly attract penalties, interest and loss of carry-forward of certain losses for the assessees, for no fault on their part.

The counsel also highlighted persistent technical glitches on the Income Tax e-filing portal that disrupted the filings, and “combined effect of delayed forms, overlapping timelines, procedural changes, and portal issues has created undue hardship, affecting the legal and fundamental rights of taxpayers and professionals…”.

In this background, while allowing the petition, the deadline was extended by the Court by a period of 1 (one) month.

Income Tax Scrutiny Assessment Under Section 143(3)

Scrutiny assessment under Section 143(3) is a detailed assessment of an income tax return filed by a taxpayer. In a scrutiny assessment, a tax officer would perform various tests and processes to confirm the correctness and genuineness of various claims, deductions, and so on, made by the taxpayer in the income tax return. The objective of a scrutiny assessment is to ensure that the taxpayer has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner.

Scrutiny assessment under Section 143(2) would be applicable for the following scenarios:

An income tax return has been filed under Section 139 or in response to an income tax notice under Section 142(1).
The Assessing Officer or Income Tax Authority deems it necessary or expedient to ensure that the taxpayer has not understated the income or has not computed excessive loss or has not under-paid income tax in any manner.

Income Tax Notice u/s 143(2)

To initiate a scrutiny assessment, the concerned Income Tax officer must first issue an income tax notice under Section 143(2). In the income tax notice under Section 143(2), the Assessing Officer would request the taxpayer to appear in person or complete the process through e-Assessment and/or produce information and documents which the tax officer ascertains to be important for determining the taxable income and tax payable. An income tax notice under Section 143(2) should be served within a period of six months from the end of the financial year in which the return is filed. For example if an income tax return is filed on 2nd November 2018, notice under Section 143(2) can be served on the assessee up to September 30, 2019. If the notice is issued on 29th September 2019 and is received by the assessee after 30th September 2019, it is not a valid notice.

The taxpayer or his/her authorised representative can appear before the Assessing Officer and will place his arguments, supporting evidence, and so on, on various matters/issues as required by the Assessing Officer.

Potential Reasons for Scrutiny Selection

Income tax return (ITR) not filed

People must file an ITR if their gross income exceeds the exemption limit, which is Rs 2,50,000 for those under the age of 60.
Regardless of income level, residents who possess international assets or have control over foreign bank accounts are required to file an ITR.

It is still required to file even if the employer has withheld TDS.

TDS-Related Errors

When TDS amounts on the Traces website and those reported in the ITR differ, there may be cause for concern.

Failure to Declare Additional Income

Reporting requirements apply to all forms of income, including interest from savings accounts and regular and term deposits.
When TDS is withheld at a rate that is less than the assessee’s tax slab, problems occur.

Abnormal or Expensive Transactions

Transactions that are much more than the reported income may come under investigation. For instance, making large contributions into bank accounts that don’t match the income that is stated.
Banks and other financial institutions frequently notify the tax authorities about these transactions.

Errors in the Income Tax Return

A notification may be sent for filing errors, such as utilising the incorrect ITR form or leaving out important information.
To fix any errors, the tax agency may require the filing of a revised return under Section 139(9).

Income Tax Notice under Section 143(2)

To start a scrutiny assessment, the Income Tax officer must issue an income tax notice under Section 143(2). This notice requests the taxpayer to provide necessary information and documents either in person or through e-assessment. It should be served within six months from the end of the financial year in which the return was filed.

The Scrutiny Assessment Hearing

During the scrutiny assessment, the taxpayer has the opportunity to present their case before the Assessing Officer, either in person or through an authorised representative. They can provide arguments, facts, and other materials requested by the Assessing Officer. They can:

Accept the Income Tax authority’s order, make any required tax payments, receive a refund, or accept the calculated loss.
Make a claim under Section 154 for payment if the clerical error persists.
They can, in line with Section 263/264, file an updated application to the Commissioner of Income Tax.

Actions After Scrutiny Assessment

After the scrutiny assessment, the taxpayer has several options:

1. Accept the order issued by the Income Tax authority and pay any outstanding taxes or claim a refund.

2. If there’s a clerical error, submit a claim for reimbursement under Section 154.

3. Submit a revised application to the Commissioner of Income Tax under Section 263/264.

4. Appeal the judgment if necessary.

Time Limit for Scrutiny Assessment

According to Section 153, the timeframe for conducting a scrutiny assessment under Section 143(3) varies as follows:

Within 21 months following the assessment year’s end, when the income was originally taxable. [For the evaluation year 2017–18 or earlier]

18 months following the conclusion of the evaluation year during which the earnings were initially assessable. [For the 2018–19 evaluation period]

12 months after the evaluation year in which income was initially deemed taxable. [For the assessment period beginning in 2019–20]

Scrutiny Assessment Hearing

While conducting a scrutiny assessment, the concerned tax officer will provide ample opportunity for the assessment to be heard and to produce documents or evidence to support the information filed in a tax return. In case of failure to produce information or non-cooperation by the taxpayer, the tax officer is empowered to complete the best judgement assessment under section 144.

In case of co-operation of the taxpayer and submission of information, after hearing/verifying such evidence and taking into account all the information produced by the taxpayer, the Assessing Officer would pass an order. On the passing of the order by the Assessing Officer, the assessee has one of the choices below:

To agree with the order passed by the Income Tax authority and pay any tax demand or receive a refund or accept the loss determined
Make an application for a refund under Section 154, if any clerical error persists
Can make a revision application to Commissioner of Income Tax under section 263/264
Appeal the order

Time Limit for Scrutiny Assessment

As per Section 153, the time limit for making scrutiny assessment under section 143(3) is:

Within 21 months from the end of the assessment year in which the income was first assessable. [For the assessment year 2017-18 or before]
18 months from the end of the assessment year in which the income was first assessable. [For the assessment year 2018-19]
12 months from the end of the assessment year in which the income was first assessable [For the Assessment year 2019-20 and onwards]

FAQs

Q1. What documentation should be prepared for Scrutiny Assessment u/s 143(3)?

Ans. It’s essential to maintain all relevant financial documents, including income statements, expense receipts, investment proofs, and any other documents related to your income and deductions. These documents will be essential if you are selected for a Scrutiny Assessment.

Q2. What is a scrutiny assessment, and how does it differ from other types of income tax assessments?

Ans. A scrutiny assessment under Section 143(3) involves a detailed examination of a taxpayer’s return to validate various claims and deductions. It aims to prevent understated income, excessive loss claims, or underpayment of taxes.

Q3. When does the Income Tax Department conduct a scrutiny assessment under Section 143(3)?

Ans. A scrutiny assessment is initiated when a taxpayer has filed a return under Section 139 or in response to a notice under Section 142(1), and the assessing officer deems it necessary to verify the financial details.

Q4. How is a scrutiny assessment initiated, and what is the role of an income tax notice under Section 143(2)?

Ans. A scrutiny assessment begins with the issuance of an income tax notice under Section 143(2). This notice requests the taxpayer to provide important information and documents for determining taxable income and tax payable.

Q5. Is a Scrutiny Assessment the same as an Audit?

Ans. While both a Scrutiny Assessment and an audit involve a thorough examination of your financial information, they are not the same. A Scrutiny Assessment is typically a routine verification of your return, while an audit is usually conducted when the tax authority has specific concerns or doubts about your financial transactions.

Q6. What happens during a scrutiny assessment hearing, and how can taxpayers cooperate with the tax officer?

Ans. During a scrutiny assessment, taxpayers have the opportunity to present their case, provide documents, and cooperate with the tax officer to ensure a fair assessment.

Q7. What are the options available to taxpayers after the Assessing Officer passes an order following a scrutiny assessment?

Ans. After the Assessing Officer’s order, taxpayers can choose to accept the order, pay any tax due, and claim refunds. They can also apply for corrections in case of clerical errors or file a revision application or appeal if they disagree with the assessment.

Q8. What is the time limit for completing a scrutiny assessment under Section 143(3)?

Ans. The time limit for scrutiny assessments varies depending on the assessment year, ranging from 12 to 21 months from the end of the relevant assessment year.

Q9. Can taxpayers request a scrutiny assessment on their own if they suspect errors in their tax return?

Ans. No, taxpayers cannot initiate a scrutiny assessment themselves. It is conducted by the Income Tax Department as part of their routine verification process.

Q10. How can taxpayers ensure a smooth scrutiny assessment process and minimize potential issues?

Ans. To navigate the scrutiny assessment process smoothly, taxpayers should keep accurate records, respond to notices promptly, and cooperate fully with tax authorities to provide the necessary information and documents.

Tax Audit ITR Filing Deadline Extended: Key Dates and Penalties

ITR filing deadline for audit cases is Nov 15: file now to avoid penalties. If a taxpayer misses the deadline to file their income tax return by November 15, 2024, they still have the option to submit a belated return by December 31, 2024

The deadline for filing the income tax return (ITR) for FY 2023-24 is November 15, 2024, for those taxpayers subject to an income tax audit and other designated taxpayers. The original deadline was October 31, 2024.

The Central Board of Direct Taxes (CBDT) had extended the deadline for filing ITR for the Assessment Year 2024-25 to November 15, 2024, for taxpayers requiring audits. So the taxpayers will have more time to do a thorough audit before filing, said Alay Razvi, Managing Partner at Accord Juris.

What extension was given?

“As certain provisions of the tax audit report may impact the computation of income, it was necessary to provide them some additional time after the tax audit is over so that they can make necessary corrections to their computation of income,” said SR Patnaik, Partner (head – taxation) at Cyril Amarchand Mangaldas.

Who must file ITR by November 15?

a) Any corporate assessee

b) Any non-corporate assessee whose books of account are required to be audited under the Income Tax Act (I-T Act) or any other law for the time being in force

c) Any partner of a firm whose accounts are required to be audited under I-T Act or any other law for the time being in force or the spouse of such partner if the provisions of Section 5A (apportionment of Income between spouses governed by the Portuguese Civil Code) applies to such spouse).

For whom the ITR filing deadline was not extended

Extension does not imply for tax audit under sections 44AB and transfer pricing audit under section 92CE of the Income-tax Act, 1961.

Rahul Sateeja, partner at DMD Advocates, explained what happens if someone fails to file ITR by November 15.

Defaulters attract a fee of Rs 5,000 if total income is Rs 5 lakh or more. The fee will be Rs 1,000 in other cases under section 234F.

Interest at 1 per cent per month or a part thereof under section 234A.

Disallowance of carry forward of losses to subsequent years under section 80.

Disallowance of special income-based deductions under section 80AC.

Initiation of prosecution in rare cases which may extend up to seven years if ITR is not filed until the end of relevant AY i.e. March 31, 2025 under section 276CC.

Taxpayers have the option to file a belated return under section 139(4) on or before 31.12.2024 (as of now).

What can happen if you fail to file ITR

If a taxpayer misses the deadline to file their ITR by November 15, 2024, they still have the option to submit a belated return by December 31, 2024. However, this will lead to certain penalties, including interest charges under Sections 234A and 234B. Additionally, a penalty under Section 234F will be applied, which may range from Rs 1,000 to Rs 5,000, based on the taxpayer’s income.

EMERGENCY: Income Tax Portal glitches! Audits breathing down

EMERGENCY: Income Tax Portal glitches! Audits breathing down our necks Professionals stranded, panic mode activated! Professionals are ready to meet deadline, but, is the Govt ready with proper portal?

The deadline for submitting the tax audit report via the e-filing ITR portal for designated taxpayers is September 30, 2024. With just 12 days remaining, the ITR e-filing portal is experiencing numerous glitches when it comes to uploading tax audit reports. Many chartered accountants and tax professionals have voiced their concerns to ET Wealth Online and on social media, indicating that they have been unable to upload their tax audit reports since September 18, 2024.

“With the deadline for tax audit report filings rapidly approaching, taxpayers and professionals are encountering significant hurdles due to ongoing issues on the Income Tax Department’s website. As the deadline nears, increased traffic to the portal has led to slowdowns and technical problems that are causing widespread frustration,” stated CA Deepak Chopra, Chairman of the Direct Tax Committee of the Karnataka State Chartered Accountants Association (KSCAA).

What is the specific problem preventing the upload of tax audit reports on the ITR e-filing portal?

The primary issue is related to the upload of the tax audit report. Chopra explained to ET Wealth Online that the problem is, “Attachment upload issues for audit reports. The portal is simply not accepting the uploaded PDF files of balance sheets, profit and loss statements, and other documentation.”

Anita Basrur, Partner at Sudit K. Parekh & Co. LLP, remarked to ET Wealth Online, “On September 18, 2024, the ITR portal was entirely non-operational for the entire day, with uploading only becoming possible late at night. Such disruptions place immense pressure on both the tax auditor and the assessee.”

On September 18, the portal faced complete downtime for the entire day, leading to severe challenges for tax auditors and assessees alike.

Respected @IncomeTaxIndia Similar is the position for Tax Audit Report when tried from different browsers. Kindly see the screenshots taken at 19:26:13, 19:28:10, 19:29:39 and 19:31:17, kindly look into it and do the needful so that timely compliance can be made, please https://t.co/w32HsOsaDW pic.twitter.com/2PJQGpJgiz
— Saurin Shah (@SaurinShahCA) September 18, 2024

https://twitter.com/agarwalravi009/status/1836662648785531099?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1836662648785531099%7Ctwgr%5E863deb450689ba3aa36a0fbcb596e9a51f412f94%7Ctwcon%5Es1_c10&ref_url=https%3A%2F%2Fm.economictimes.com%2Fwealth%2Ftax%2Fwill-lot-of-taxpayers-miss-the-tax-audit-report-deadline-due-to-this-glitch-on-the-itr-e-filing-portal%2Farticleshow%2F113483379.cms

I am unable to upload balance sheet and p&l during 3cd 3cb uploading
Json is properly uploaded
It is since 2 days
Pls do needful elae extend tax audit date immediately #taxaudit #itr #incometax @IncomeTaxIndia @FinMinIndia
— Dhiraj pareek (@pareek_drj) September 19, 2024

Income Tax Audit Due Date Extention Update

The income tax law mandates a specific class of taxpayers to conduct income tax audits. This audit involves a thorough inspection of the taxpayer’s books of accounts, particularly those with business or professional income. The primary aim of tax audits is to ensure the accuracy of financial records and income tax returns (ITRs). By mandating certain taxpayers to conduct a tax audit and submit its report, the law aims to deter tax evasion and discourage misrepresentation of income or inflation of expenses to reduce income tax payments.

What Is a Tax Audit?

In essence, a tax audit examines the books of accounts of a business or profession from an income tax perspective. It is typically carried out by practicing chartered accountants to verify the income tax returns of the concerned taxpayer.

Tax Audit Deadline and Applicable Taxpayers

The deadline for eligible taxpayers to conduct a tax audit and submit its report is September 30. The following categories of taxpayers are required to adhere to this requirement:

Taxpayers with Business Income:
- If the turnover or gross receipts of a business exceed Rs 1 crore in a financial year, the business must get its accounts audited. This threshold is increased to Rs 10 crore if cash receipts and cash payments during the year do not exceed 5% of the total receipts or payments. Additionally, businesses opting for presumptive taxation under Section 44AD must also undergo an audit if the turnover exceeds Rs 2 crore.
- Under presumptive taxation, for taxpayers with income from the business of plying, hiring, or leasing goods carriages, an audit is required if the turnover exceeds Rs 10 lakh.
Taxpayers with Professional Income:
- Professionals, such as doctors or chartered accountants, need to have their accounts audited if their gross receipts from the profession for the financial year exceed Rs 50 lakh. Additionally, for specified professionals claiming profit below 50% of their gross receipts, tax audit is mandatory irrespective of their gross receipts being less than Rs. 50 Lakh.

Deadline for Tax Audit and ITR Filing

The deadline for submission of the income tax audit report is September 30. For taxpayers covered by the transfer pricing audit, the last date for completion of the tax audit is October 31. It’s important to note that books of accounts and related records are required to be maintained for eight years from the end of the relevant financial year.

The due date to file ITR for taxpayers liable for tax audit under section 44AB is October 31. If the taxpayer misses the deadline, they can still file the ITR after paying a penalty.

Exemption from Tax Audit Requirements

According to Section 44AB, if a person is already required to audit their accounts under another law, they are not required to perform a separate audit for section 44AB. Additionally, a tax audit is not required for a professional if their gross receipts are up to Rs 75 lakh, provided their cash receipts are less than or equal to five per cent of their total gross receipts.

Income Tax Audit for FY 2023-24

INCOME TAX AUDIT FOR FY 2023-24

The deadline for income tax audit for FY 2023-24 is September 30, 2024. This applies to taxpayers who are required to get their accounts audited under Section 44AB of the Income Tax Act.

Who needs to file an income tax audit?

The following taxpayers are required to file an income tax audit:

Individuals and Hindu Undivided Families (HUFs) with a total income of ₹50 lakhs or more from profession or business.
Partnerships with a total income of ₹25 lakhs or more from business or profession.
Companies with a total income of ₹50 lakhs or more from business or profession.
Other entities (such as trusts, societies, and co-operative societies) with a total income of ₹25 lakhs or more from business or profession.

If you fall under any of these categories, you must get your accounts audited by a chartered accountant and submit the audit report to the income tax department by September 30, 2024.

Presumptive taxation under Section 44AE: “For taxpayers with income from the business of plying, hiring, or leasing goods carriages, if the presumptive income under Section 44AE is less than the actual income, the taxpayer needs to get their accounts audited if the turnover exceeds Rs 10 lakh.

Note:

The due date for filing the income tax return (ITR) for taxpayers who are required to get their accounts audited is October 31, 2024.
If you miss the deadline for filing the audit report, you may be subject to penalties.

Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.

Reporting u/s 269SS & 269T in Income Tax Audit Report (Clause 31 of Form 3CD)

Income Tax Audit Checklist for Deemed Profits under Section 32AD, 33AB, and 33ABA of the Income Tax Act, 1961

Tax Audit Checklist on Clause 24 of Form 3CD under the Income Tax Act, 1961

Clause 24 of Form 3CD requires the tax auditors to report amounts deemed to be profits and gains under Sections 32AC, 32AD, 33AB, 33ABA, and 33AC. Only facts/data are to be reported in this Clause. However, the tax auditor will have to exercise his professional judgment based on the facts of the case to form an opinion on whether any specified violations of the sections that give rise to deemed profits occurred during the previous year.

This provision applies to assesses who:

(a) Are engaged in manufacturing or production in notified backward areas of Andhra Pradesh, Bihar, Telangana or West Bengal having acquired and installed new plant and machinery between 01-04-2015 and 31-03-2020 and availed of deductions under Section 32AD.

(b) Are involved in growing and manufacturing tea, coffee or rubber in India or

The tax auditor is not required to report any capital gains arising from the transfer of assets for which a deduction has been claimed or from the transfer of assets acquired from deposits for which a deduction has been claimed.

The tax audit checklist on Clause 24 of Form 3CD is as below:

Tax Audit Checklist for Clause 24 for deemed profit under Section 32AD

S. No.	Particulars	Yes/No/N/A	Comment
(1)	Has the assessee set up any undertaking or enterprise for the manufacture or production of any article or thing in any backward area notifiedby the Central Government in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of Telangana or in the State of West Bengal?
(2)	If the answer to (1) is “Yes”, has the assessee acquired and installed any new plant or machinery in such undertaking or enterprise in the previous year, 2018-19 or 2019-20?
(3)	If the answer to (2) above is “Yes” ” has the assessee transferred such new plant or machinery by sale or otherwise during the previous year 2023-24?
(4)	(a) If the answer to (3) above is “Yes”, have you verified the amount of deduction allowed under sub-section (1) of Section 32AD in respect of such a new asset in the previous year in which it was acquired and installed(2018-19/2019-20) with reference to ITR filed, tax audit reports and IT assessment order for the relevant previous year (2018-19/2019-20)?(b) Have you reported the amount of deduction claimed and/or allowed in respect of the transferred asset as deemed profits in Clause 24?

Tax Audit Checklist for Clause 24 for deemed profit under Section 33AB

S. No.	Particulars	Yes/No/N/A	Comment
(1)	Is the assessee engaged in the business of growing and manufacturing Tea, Coffee or Rubber in India?
(2)	If yes, check whether the assessee has claimed deduction under section 33AB in earlier years by depositing the amount in a special account or deposit account with NABARD or Tea/Coffee/Rubber Board.
(3)	If yes, ascertain whether any amount is withdrawn from a special account or deposit account during the year except in the circumstances specified in clause (a) or clause (d) of sub-section (3) of section 33AB.
(4)	If yes, report under this clause the amount which is relatable to the deduction claimed earlier.
(5)	Check whether the amount released/withdrawn has been utilized for the purchase of assets specified under clauses (a), (b), (c) or (d) of section 33AB(4).
(6)	If yes, report against this clause the amount that is relatable to the deduction claimed earlier.
(7)	Is any asset sold during the year that was acquired with the amount standing in the special account/deposit account within the preceding eight years in accordance with the specified scheme?
(8)	If yes, report against this clause the amount which is relatable to the deduction claimed earlier under section 33AB(1).
(9)	Is there any amount that was released/withdrawn from a Special Account or deposit account during the year and remained unutilized as of year-end?
(10)	If yes, report against this clause the amount which is relatable to the deduction claimed earlier.
(11)	Obtain a copy of the audit report obtained by the assessee in Form No. 3AC.
(12)	(a) Ascertain from clause 11 of Part III of Form No. 3AC whether any amounts withdrawn from the special account is not utilized for the specified purposes within the same year or is misutilised.(b) If so, report the amount of such deemed profits under clause 24 of Form No. 3CD.
(13)	(a) Ascertain from clause 11 of Part III of Form No. 3AC whether any assets acquired per the scheme from money withdrawn from the special account have been transferred within 8 years from the end of the previous year in which the asset was acquired.(b) If so, report the deemed profits against clause 24 of Form No. 3CD.

Tax Audit Checklist for Clause 24 for deemed profit under Section 33ABA

S. No.	Particulars	Yes/No/N/A	Comment
(1)	Is the assessee engaged in the business of prospecting for, extracting, or producing petroleum, natural gas, or both in India?
(2)	If yes, has the assessee claimed a deduction under section 33ABA in earlier years (by depositing the amount in a special account)?
(3)	If yes, report against this clause whether the amount is relatable to the deduction claimed earlier.
(4)	Has the amount released/withdrawn been utilised for the purchase of assets specified under clause (a), (b), (c), or (d) of section 33ABA(4)?
(5)	If yes, report against this clause, such an amount relatable to the deduction claimed earlier.
(6)	Is any asset sold during the year that was acquired with the amount standing in the special account within the preceding eight years in accordance with the specified scheme?
(7)	If yes, report against this clause the amount which is relatable to the deduction claimed earlier.
(8)	Is there any amount that has been released/withdrawn from the Special Account during the previous year and has remained unutilised as the end of the previous year?
(9)	If yes, report against this clause, such an amount that is relatable to the deduction claimed earlier.
(10)	Obtain a copy of the audit report obtained by the assessee in Form No. 3AD (if the auditor issuing Form No. 3AD is different from the tax auditor).
(11)	(a) Ascertain from clause 12 of Part III of Form No. 3AD whether any amounts withdrawn from the account are not utilised for the specified purposes within the same year or are misutilised. This can also be verified from a certificate obtained from CA under Para 10(2) of the Scheme.(b) If so, report the amount of such deemed profits under clause 24 of Form No. 3CD.
(12)	(a) Ascertain from clause 13 of Part III of Form No. 3AD whether any assets acquired in accordance with the scheme from money withdrawn from the special account have been transferred within eight years from the end of the previous year in which the asset was acquired.(b) Have you prepared/obtained a statement reconciling the list of assets sold with the deletion of assets reported in clause 18 of Form No. 3CD?(c) Report the deemed profits against clause 24 of Form No. 3CD.

Decoding Tax Audit u/s 44AB(e):44AD
Myth vs Facts

CBDT Circular No. 2/2024 Update: Correct Furnishing of Audit Reports for AY 2023-24

Kind Attention Taxpayers!

Kindly ensure that you have furnished Audit Report in the correct applicable Form (10B or 10 BB) for AY 2023-24.

CBDT has allowed such trusts/institutions which have incorrectly furnished their Audit Reports in Form No. 10B where Form No. 10 BB was applicable and vice versa, to furnish the Audit Report in the applicable Form No. 10 B/ 10BB on or before 31st March, 2024.

Please refer to the CBDT Circular No.2/2024 dtd 05.03.2024 for more details:

circular-no-2-2024-2 Download

CBDT extends due date of Filing Audit report

CBDT extends due date of Filing Audit report- Section 10AA(8)

F. No. 370142/40/2023-TPL Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Circular No. 18 of 2023-Income Tax |Dated: 20th October, 2023

Order under section 119 of the Income-tax Act

On consideration of difficulties arising to the taxpayers and other stakeholders in timely filing of report of accountant required to be filed under clause (8) of section 10AA read with clause (5) of section 10A of the Income -tax Act, 1961 on account of notification of relevant Form 56F on 19.10.2023 and with a view to avoid genuine hardship to such cases, the Central Board of Direct Taxes, in exercise of its powers under 119(2)(b) of the Income Tax Act, 1961, hereby extends the due date of filing of report of the accountant as required to be filed under clause (8) of section 10AA read with clause (5) of section 10A of the Act, for Assessment Year 2023-24 from the specified date under section 44AB to 31st of December, 2023.

(Amrit Pritom Chetia) Under Secretary to the Govt. of India

Decoding Clause 44 in the Tax Audit Report: Insights and Strategies

Clause 44 made its debut as a new addition to Form 3CD of the Tax Audit Report (TAR) starting from the Assessment Year 2022-23. It is worth noting that although this clause was initially introduced through a notification dated July 20, 2018, its enforcement was consistently postponed each year through a series of circulars. The final circular addressing this matter was Circular No. 05/2021, dated March 25, 2021, which extended the deadline for its implementation until March 31, 2022. Consequently, any Tax Audit Report in Form 3CD submitted after March 31, 2022, must adhere to the requirements outlined in clause 44.

Since the introduction of this clause in the Tax Audit Report, tax professionals have expressed significant concerns and challenges related to gathering the necessary information from the assessees’ accounting records. Additionally, there has been ongoing uncertainty surrounding the interpretation of the information presented in this clause, particularly from the perspective of tax authorities.

This article endeavors to offer valuable insights into Clause 44, taking into consideration the latest Revised Guidance Note issued by the Institute of Chartered Accountants of India (ICAI) [Please see: “Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961 (Revised 2023) – Ninth Edition 2023″]. Additionally, the author delves into a discussion about the risks associated with and potential mitigating strategies for providing information within this clause.

♦ Consolidated or Expenditure-wise information:

The primary question that arises is whether to provide the figures in a consolidated manner or furnish expenditure-wise details. In this context, Para 82.1 of the Guidance Note provides clarity by stating that the information required under this clause should be presented in a consolidated fashion, and there is no requirement to provide figures on an expenditure head-wise or nature-wise basis.

However, the Guidance Note suggests having a reconciliation statement in the following manner:

Description	Amount (Rs)
Total value of expenditure in P&L for the year	xxxx
Add: Total value capital expenditure not included in P&L for the year	xxxx
Less: Total value of non-cash charges considered as expenditure	xxxx
Less: Total value of expenditure excluded for being transactions in securities and transaction in money	xxxx
Less: Total value of expenditure excluded by virtue of Schedule III to the CGST Act 2017.	xxxx
Balance being value of expenditure for clause 44	xxxx

[Details of all deductions and additions must be maintained for each sub- entity (GSTIN wise) of the legal entity]

♦ Capital expenditure to be included or not:

According to the guidance note, the term “expenditure” encompasses “capital expenditure” as well. Therefore, it is essential to provide information regarding the capital expenditure also in the said clause. However, if the assessee is of the view that the capital expenditure need not be included in the total expenditure and is not in a position to give the details as required in clause 44 in respect of capital expenditures, the tax auditor should report the same in his main report (Form 3CA/3CB).

♦ Inter-branch transfers:

When it comes to transactions between distinct units of the same entity, it is crucial for the assessee to maintain accurate records. Specifically, these records should clearly indicate the value of outward supplies recorded by one unit as sales for determining GST liability and the value of inward supplies recorded by another unit as purchases for the purpose of claiming input tax credit. Although these values should be eliminated in the consolidated financial statements, it’s essential to prepare a comprehensive reconciliation statement and keep it on record. This reconciliation statement serves as a valuable resource during tax assessments and ensures transparency and compliance with tax regulations.

♦ Decoding the figures in Clause 44:

It is essential to bear in mind that the consequences of disclosing the data in this clause remain uncertain. As we are aware, the department is actively gathering information from all available sources, including the utilization of Artificial Intelligence (AI). Consequently, we cannot dismiss the possibility of cases coming under scrutiny triggered by specific flags or criteria associated with the figures reported in various columns of the Table given under clause 44. For instance, if the ratio of expenditures related to entities not registered under GST (as presented in column 7) compared to the total expenditure incurred (as reported in column 2) surpasses certain predefined thresholds, an inquiry may be initiated. This inquiry could take an internal or/and external form. When referring to internal scrutiny, it means that the department may conduct a comprehensive analysis of the available data for further investigation. In contrast, by mentioning external scrutiny, it means that the department may issue assessment notices to taxpayers, requesting additional information. It is prudent to be more concerned about internal scrutiny than external scrutiny, especially in light of the Aadhaar-PAN linking incident, given the department’s extensive repository of big data.

♦ Expenses related to entities having GSTIN but supplied exempt goods or entities falling under Composition Scheme:

Regarding the reporting of expenses related to supplies made by entities registered under GST but supplied exempted goods to the assessee or entities registered as composite suppliers, it becomes quite challenging to compile this information unless the taxpayer maintains their accounting records in a way that includes such details. This becomes particularly complex when dealing with a long list of suppliers. Therefore, a decision must be made on whether to provide figures in this column or not. If the choice is made to omit to furnish the information in this column, it is important to provide an explanation for this omission in the form of a comment in the main report.

♦ Expenses related to entities having GSTIN and supplied taxable goods:

Regarding the reporting of expenses related to supplies made by regular suppliers (excluding composite suppliers), one has got the option to cross-verify the data provided by the assessee using information obtained from the following sources:

(i)		From GST Portal: We can retrieve Table 8A of GSTR 9 data in an Excel sheet format downloaded from the GST portal and calculate the total taxable value figures.
(ii)		From the Income Tax Site: We can verify the value of purchases from GST-registered suppliers as reported in the Annual Information Statement (AIS).

While it is possible that the figures from these sources may not align perfectly, they can provide us with a sense of the reasonableness of the data provided by the assessee. In cases where a significant discrepancy exists, we may request an explanation from the assessee and then make a decision accordingly.

♦ Expenses related to entities having GSTIN and supplied taxable goods:

If the figures reported under the column “Expenditures relating to entities not registered under GST” are substantial, it is imperative for an auditor to investigate and understand the underlying reasons. The following factors may help mitigate the risk of any anomalies:

(a)		Assessee engaged in the business of dealing in agricultural commodities that are exempt from tax;
(b)		Major expenditures are covered under Non-GST or exempt category;
(c)		Where the expenses are subjected to TDS;
(d)		Where the payment for the expenses were made through the banking channel;
(e)		Smaller businesses might be involved in the supply chain, and they may fall below the GST registration threshold, contributing to the presence of non-registered entities in the expenses.

By examining these factors and obtaining a clear understanding of the nature of the expenses and the entities involved, the auditor can make a more informed assessment and mitigate the risk of misinterpretation or misreporting.

As a corollary, when the figures reported in the mentioned column are substantial, and the following instances are present, the auditor should exercise heightened vigilance to ensure the authenticity of the transactions:

(a)		Taxable Products: If the products purchased are taxable under GST, it raises the significance of these transactions and warrants closer scrutiny.
(b)		Cash Payments: Payments made in cash can increase the risk of irregularities or inaccuracies in reporting, and therefore, require careful examination.
(c)		Absence of TDS: Transactions not subjected to Tax Deducted at Source (TDS) can potentially indicate a need for closer inspection, as TDS is a common regulatory requirement for certain types of payments.
(d)		Internal Documentation: Transactions primarily supported by internal vouchers, bills, or purchase notes, as opposed to external invoices or receipts, may necessitate a more thorough examination to verify their legitimacy.

If the auditor encounters difficulties in forming a conclusive opinion based on the data provided by the assessee, it is essential to include appropriate comments in the main report. These comments should clearly convey an concerns or uncertainties regarding the reported transactions, ensuring transparency and clarity in the audit process.

♦ Expenses covered under Reverse Charge Mechanism (RCM):

In case of expenditures that were subjected to tax on reverse charge basis, we may encounter with two issues-

(a)		Expenses incurred in respect of supplies made by a person registered under GST but issuing RCM invoices;
(b)		Expenses incurred in respect of supplies made by an unregistered person where the assessee pays tax under RCM on voluntary basis.

In the first scenario, the expenditure under the said category ought to be reported under column 5 of clause 44 i.e., “Relating to other registered entities”.

In the second scenario, the expenditure under the said category should be reported under column 7 i.e., Expenditure relating to entities not registered under GST”.

♦ Concluding Remarks:

Before parting with, readers attention is invited to the comment made in clause 82.20 of the Guidance Note which is reproduced hereunder:

82.20 An appropriate disclosure should be made by the Tax auditor in Form 3CA/3CB, as the case may be, for the view taken by the assessee in relation to the meaning of “Total expenditure” and the method of filling up the appropriate columns. If the assessee is not in a position to give the details as required in clause 44, an appropriate disclosure/disclaimer may be made by the auditor in Form 3CA/3CB. Where the assessee has provided reason for not being able to provide details, the same may be reported, if found appropriate.

Author: CA V. Sudharsan

Missed Deadline! Avoiding Penalties: Tax Audit Deadlines and Requirements

Tax audit due date: The deadline for taxpayers to submit their tax audit report was September 30, 2023. The income tax department did not extenda this deadline, leaving those taxpayers who missed submission to a penalty. Not everyone has to worry about this, though!

Only folks who have a business or a professional income above a certain amount need to have their books of accounts audited. For business people, if your total sales or income from the business is more than Rs 1 crore in a year, you need to get an audit done. But if you deal primarily in digital transactions and very little in cash, you only need an audit if your income exceeds Rs 10 crore, Economic Times reported.

If you are a professional, like a doctor or a lawyer, you need an audit only if you earn more than Rs 50 lakh in a year. However, people who have chosen the presumptive income tax scheme usually don’t need to worry about audits.

The penalty is either 0.5 per cent of the taxpayers’ total sales, turnover, or gross receipts or Rs 1.5 lakh, whichever is less. If you are running a business and you have made late submissions, you will have to pay a bit from your earnings as a penalty.

What If You Don’t Pay the Penalty?

If you do not submit the audit report and miss paying the penalty, the I-T Department will consider it as if you have not filed your income tax return (ITR). You could get a notice from the tax department to correct your ITR. If you don’t fix your ITR in time, you might need to pay even more Economic Times reported.

Any Way Out of the Penalty?

There is a bit of good news! The Assessing Officer (the tax person checking your files) can decide not to make you pay the penalty for the late audit report if you have a genuine reason for the delay. But, if that’s the case, you will still have to pay the penalty for not filing the ITR on time.

Penalties and Consequences of Not Filing a Tax Audit Report in India

Let’s explore the penalties for not filing a Tax Audit Report in India:

1. Penalty under Section 271B Section 271B of the Income Tax Act deals specifically with the penalty for not furnishing a Tax Audit Report. If a person who is required to get their accounts audited under Section 44AB of the Income Tax Act fails to do so, they are liable to pay a penalty. The penalty amount is calculated at 0.5% of the total turnover or gross receipts, subject to a maximum limit of ₹1,50,000.

2. Disallowance of Deductions Apart from the penalty mentioned above, not filing a Tax Audit Report can have significant financial implications. The Income Tax Department may disallow various deductions and expenses claimed by the taxpayer. This can result in a higher taxable income, leading to increased tax liability.

3. Interest on Tax Due If the income tax liability is higher due to the disallowance of deductions as a result of not filing the Tax Audit Report, the taxpayer may also be liable to pay interest under Section 234A, 234B, and 234C of the Income Tax Act. Interest is charged on the amount of tax that should have been paid and the delay in paying it.

4. Legal Proceedings Failure to comply with tax audit requirements may lead to legal proceedings initiated by the Income Tax Department. These proceedings can be time-consuming and may result in additional penalties and fines.

5. Impact on Future Compliance Non-compliance with tax audit requirements can negatively impact the taxpayer’s compliance rating with the Income Tax Department. This may lead to increased scrutiny in the future and a higher likelihood of audits and investigations.

6. Reputation Damage For businesses, not filing a Tax Audit Report can damage their reputation and credibility. It may lead to trust issues with stakeholders, including clients, suppliers, and investors.

Big Update for Tax audit due date for AY 2022-23

Last date extended to submit an income tax audit report: Certain taxpayers have to mandatorily conduct an income tax audit of their books of accounts as per the Income-tax Act, 1961. An income tax audit is a thorough inspection of the books of accounts of a business entity or professional individual.

“The government’s mandate for income tax audits among businessmen and professionals crossing specific income thresholds demonstrates a commitment to financial transparency and accountability. This measure serves multifaceted purposes. Firstly, it ensures the accuracy of financial records and ITRs, aligning reported income and expenses with actual financial activities. Secondly, such audits act as a deterrent against tax evasion, discouraging entities from misrepresenting income or inflating expenses to lower tax obligations,” says Chartered Accountant Sandeep Agrawal, Director, TeamLease Regtech, a regulatory compliance technology company.

Read below to know when is the due date to submit a tax audit report and ITR filing by such taxpayers and who has to be hired to conduct an income tax audit as per income tax rules.

What is the last date to submit a tax audit report?

“A taxpayer who is required to obtain a tax audit report should get the book of accounts audited and obtain the audit report on or before 30th September of the relevant assessment year,” said Vijay Bharech, director, Deloitte Haskins & Sells LLP, a business and tax consultancy firm.

For example, if an individual is required to get a tax audit done due to business or professional income in FY 2022-23 above the audit requirement threshold, he/she should get the audit done by September 30, 2023 and the same report should be uploaded in the ITR portal by the same date.

Deadline for ITR filing with audit report

It is important to understand that different categories of taxpayers have different due dates to file ITR.

“The due date for filing the ITR for taxpayers who are required to submit an audit report is October 31st of the assessment year. This due date is applicable to taxpayers who are required to get their accounts audited as per Section 44AB,” said Aditya Chopra, Managing Partner, Victoriam Legalis – Advocates & Solicitors, a Mumbai based law firm.

For example: suppose an individual has business or professional income above the specified threshold which mandates an income tax audit in FY 2022-23 (AY 2023-24). Then such an individual must get their books of accounts audited by September 30, 2023. And file his ITR along with the audit report by October 31, 2023.

So, in essence, taxpayers with business and professional incomes are required to remember two important dates in the context of ITR filing. Firstly, the tax audit report due date under section 44AB which is September 30. Secondly, the ITR filing due date along with this tax audit report, which is October 31.

The deadline for submission of income tax audit report by a fund, or trust, or educational institution, university or a hospital and others have been extended to October 31, 2023, for FY 2022-23 (AY 2023-24). The Central Board of Direct Taxes (CBDT) made this announcement via notification on September 18, 2023.

Who should be hired to conduct such a tax audit?

It is important to note that a taxpayer who is mandatorily required to conduct an income tax audit is required to hire two different chartered accountants. One chartered accountant is required for managing and handling books of accounts, day-to-day operations, etc. Another chartered accountant is required to conduct the inspection of books of accounts for the purpose of the tax audit. A chartered accountant conducting a tax audit cannot manage day to day operations of the same taxpayer.

“The tax audit report is required to be e-filed by the chartered accountant. After filing of the tax audit report by the chartered accountant, the taxpayer has to approve the report from his e-fling account with the Income-tax Department,” said Bharech.

ITR latest update: Filing Revised and Belated Income Tax Returns: Rules and Implications

As the deadline for filing the original income tax return (ITR) concluded on July 31, many individuals may wonder about the implications of filing a revised ITR after this date. Fortunately, there are options available for those who missed the original deadline, but it’s essential to understand the rules surrounding belated and revised returns.

For those who missed the deadline to file the original ITR, there is an option to file a belated ITR. Additionally, taxpayers who initially filed their returns, but later realised they omitted information or made incomplete disclosures can file a revised return.

When can you file a revised return?

To qualify for a revised return, the original return should have been filed by the due date, which was July 31, 2023, and it must have been verified within 30 days of e-filing. If the original return wasn’t filed by the due date, it will be considered a belated tax return, incurring late fees under Section 234F of the Income Tax Act, 1961.

However, if the original return was filed on time, taxpayers have time until December 31 to submit a revised return under Section 139(5). This can be done even if the original return has already been processed by the I-T Department.

Penalties on filing belated ITR

Filing a belated return comes with a penalty. The taxpayers filing a belated return will be levied a late fee of Rs 5,000 and applicable interest rate. If the taxpayer’s total annual income is less than Rs 5 lakh in a financial year, the late fee will be Rs 1,000.

Interest changes will be applicable at a rate of 1 per cent per month on the taxable amount from the last date of ITR filing.

No penalty is imposed for filing a revised return. However, if the assessing officer discovers that the error was intentional or fraudulent, the revision may not be allowed, and a penalty could be imposed.

Furnishing an updated return does not incur a penalty or fee. Still, taxpayers are required to pay additional tax, if any, according to Section 140B of the Income Tax Act.

Section 139(4) of the Income-tax Act of 1961 allows for the filing of overdue returns. The process for filing a belated return is the same as filing an ITR before the due date.

The revised or belated ITRs can be filed through the e-filing portal of the Income Tax Department at https://eportal.incometax.gov.in/. Additionally, certain private entities registered by the Income Tax Department can assist with the filing process.

Filing Income-Tax Returns: Understanding Belated, Revised, and Updated ITRs

While the deadline to file the original income-tax return (ITR) was July 31, individuals can still file a belated, revised, or updated return, based on their circumstances and timing.

If you have not yet filed an ITR for the 2022-2023 financial year (FY23), you can file a belated return.

If you have already filed your ITR, but now realise that there was a mistake or you misreported your income, you can file a revised return.

The Finance Act, 2022, introduced the concept of updated return (ITR-U) under Section 139 (8A).

Says Sandeep Bajaj, advocate, Supreme Court of India, “It is a form that allows individuals to update their ITRs and correct errors or omissions.

Taxpayers have a two-year window from the end of the year in which they initially filed their return to make amendments.

An individual taxpayer who is eligible to file an updated return can do so even if she has not filed an original or a belated return.

Who can file

An updated return can be filed if the return was not filed, income was inaccurately reported, the incorrect tax rates were applied, to reduce carried-forward losses, or to correct the wrong income category.

Says Bajaj, “An updated return can be filed for original, belated or revised return. However, only one updated return is allowed per assessment year.”

In FY24, a person can file an updated return for assessment years 2021-2022 and 2022-2023.

Pros and cons

If a taxpayer is liable to file an ITR under Section 139, s/he can comply with this requirement by filing an ITR-U, thereby protecting herself/himself from penalties for misreporting or underreporting income.

Says Prateek Goyall, partner at law firm MV Kini, “Filing ITR-U helps evade scrutiny assessment under Section 143 (3), best judgement assessment under Section 144, and income escaping assessment under Section 147.

Taxpayers can also protect themselves from surveys, search and seizure proceedings by filing ITR-U.

As for the cons, Pallav Pradyumn Narang, partner, CNK points out, “This return can’t be filed to claim refunds, losses, or a refund in excess of what was claimed in the original or belated ITR.

When to file updated, revised, or belated ITR

If you missed the July 31, 2023, deadline for filing your ITR for FY23, you have the option to file a belated return.

Says Ankit Rajgarhia, principal associate, Karanjawala & Company, Advocates, “A belated return allows you to file your ITR after the deadline, but there are a few consequences.

“You may be liable to pay a penalty and interest on any tax payable. Also, you can’t revise a belated return once it’s filed.”

Furthermore, losses under certain heads of income, such as capital gains and business income, can’t be carried forward to future years if you file a belated return.

If you’ve not filed the original ITR, instead of waiting to file an updated return, go for a belated return.

Says Bajaj, “If someone missed the July 31, 2023 deadline to file their ITR for the year 2022-2023, it is better to file a belated ITR rather than an updated ITR.

Filing a belated ITR by March 31, 2024, is a way to fulfil tax obligations and reduce the risk of having to face any consequences.

Says Goyall, “If the taxpayer failed to disclose certain incomes and pay the appropriate tax, they should file an ITR-U.

Note that the updated ITR can’t be used to declare lower income, claim losses, or request income refunds.

Says Narang, “When there is an error, additional income has to be disclosed, or if there is any mistake in the original or belated ITR, which may result in a refund also, a taxpayer can file a revised return until December 31 of the relevant assessment year.

However, no refund can be claimed with ITR-U.

Thread which helps you in Filing Income Tax Audit Report Form 3CA-3CD and 3CB-3CD

1: Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961 (Revised 2023) (From ICAI)

75812dtc61332-1-1 Download

2: Quick Referencer for Tax Audit under Section 44ab of the Income Tax Act, 1961 (From icai

75265taqrb60844-1-1 Download

3: Audit Working Paper Templates (From ICAI)
PDF File:

75000aasb60542a Download

Word File:

75001aasb60542b Download

4: Items reportable in the Tax Audit Report (From Income Tax India)

Items-reportable-in-the-Tax-Audit-Report Download

5: Form No.: 3CA/3CB/3CD (From Income Tax India)
3CA:

103120000000007765 Download

3CB:

103120000000007766 Download

3CD:

103120000000007767 Download

6: Depreciation Rates (From Income Tax India)

Depreciation-Rates Download

7: Reporting of TDS TCS in Clause 34(a) of Form 3CD (Pic 1)

8: Reporting us 269SS & 269T in Income Tax Audit Report (Form 3CD) (Pic 2)

9: Reporting under Clause 44 of Form 3CD (Pic 3)
#TaxationUpdates

Reporting u/s 269SS & 269T in Income Tax Audit Report (Form 3CD)

INCORRECT PROCESSING OF INCOME TAX RETURNS FILED FOR THE AY 2023-24

SUBJECT: REPRESENTATION REGARDING INCORRECT PROCESSING OF INCOME TAX RETURNS FILED FOR THE AY 2023-24 [DENIAL OF DEDUCTION EVEN IN CASES WHERE IT HAS NOT BEEN CLAIMED]

The Karnataka State Chartered Accountants Association (R) (in short ‘KSCAA’) is an association of Chartered Accountants, registered under the Karnataka Societies Registration Act, in the year 1957. KSCAA is primarily formed for the welfare of Chartered Accountants and represents before various regulatory authorities to resolve the professional problems faced by Chartered Accountants and the business community.

In the past, we have written to your good selves many times populating various issues, challenges and hardships being faced by taxpayers and Chartered Accountants and suggesting possible solutions on the same. Herein, we are presenting before your good selves, an issue regarding the Proposed Adjustments u/s 143(1) (a) of the Income-tax Act, 1961 (the Act) for deduction u/s 80P, which is causing hardship to the taxpayers….

Who Needs to Conduct an Income Tax Audit? Understand the Requirements and Penalties

As per the Income Tax Act 1961, certain categories of taxpayers are required to get their accounts audited for income tax purposes.

An audit of books of accounts may also be required under other laws such as the Companies Act, 2013, etc. Despite similarities between the two types of audits, an income tax audit is different in many ways. Hence, an income tax audit has to be done separately by those who are required to get it conducted.

Who is required to get income tax audit done

“India tax laws mandate a certain class of taxpayers to get their accounts audited by a chartered accountant (CA). This is commonly known as the tax audit, as per Section 44AB. It aims to ascertain the compliance of (the accounts with) various provisions of the Income Tax Law and the fulfilment of other requirements of the Income Tax Law,” says Vijay Bharech, Director, Deloitte Haskins & Sells LLP, a business consultancy company.

Taxpayers who are mandatorily required to get their accounts audited must get the audit report uploaded on the income tax portal by September 30 every year. Further, the income tax return (ITR) filing deadline for these taxpayers is October 31 annually.

Here’s who is required to get an income tax audit conducted:

Business Income: “A businessman is required to have his accounts audited if the total sales, turnover, or gross receipts from the business during the previous year (i.e. the financial year for which ITR has to be filed) exceeds Rs 1 crore. However, this limit of Rs 1 crore shall be increased to Rs 10 crore if cash receipts and cash payments during the year do not exceed 5% of the total receipts or payments, as the case may be,” says Naveen Wadhwa, vice president, Taxmann, a Delhi-based company that publishes tax books.

“Even if the turnover of a person is below the audit threshold limit, he may still be liable for an audit if he is eligible for the presumptive tax scheme under Section 44AD. This requirement applies if his income exceeds the basic exemption limit and he has opted for the presumptive scheme in any of the previous five years but chooses not to opt for the same in the current year (the year for which ITR is being filed),” said Wadhwa.

Professional Income: A professional, such as a doctor or a Chartered Accountant, is required to have his accounts audited if his gross receipts from the profession for the financial year for which ITR is being filed exceeds Rs 50 lakh.

However, “If a professional, as defined in section 44AA reports his income as less than 50 per cent of his/her gross receipts, then they need to get their accounts audited under section 44AB, even if their gross receipts are below the audit threshold limits, i.e., Rs 50 lakh,” says Chartered Accountant Astha Gupta, Partner, S.K. Gulati and Associates, a Delhi-based CA firm.

What happens if tax audit is not done

Do note that if a tax audit was required to be done mandatorily by an individual and it is still not done, then the ITR submitted will be deemed defective. Further, a penalty may also be imposed on the individual at fault.

Income Tax Department’s send big update for ITR E-filing process

Complete your e-filing process today! Do not forget to verify your ITR within 30 days of filing. Delayed verification may lead to levy of late fee in accordance with provisions of the Income-tax Act, 1961.

Don’t delay, verify your ITR today!

Dear Taxpayers,

Complete your e-filing process today!
Do not forget to verify your ITR within 30 days of filing.
Delayed verification may lead to levy of late fee in accordance with provisions of the Income-tax Act, 1961.

Don’t delay, verify your ITR today! pic.twitter.com/NQt2fArOBW
— Income Tax India (@IncomeTaxIndia) August 23, 2023

Latest Updates:
The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022.

E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V.

Steps to e-Verify Your Tax Return

There are several methods available for e-verifying your ITR:

e-Verify through Cleartax
Generate Aadhaar OTP
Existing Aadhaar OTP
Existing EVC
Digital Signature Certificate (DSC)
Generate EVC through a bank account
Generate EVC through the Net Banking
Generate EVC through DEMAT account
Generate EVC through bank ATM option (offline)

E-verification on Income Tax Portal

Now let us see how to e-verify your ITR on the Income Tax e-Filing portal.

Method 1: e-Verification Through Aadhaar OTP

Log in to your Income Tax e-filing account. Under the ‘e-file’ tab > select ‘Income Tax Returns’ > then ‘e-Verify Return’.
If you do not have Aadhaar OTP available with you: Select the option ‘I would like to verify using OTP on mobile number registered with Aadhaar.
If you already have the Aadhaar OTP with you: Refer to ‘method 3’

Note: For e-verification of your ITR through Aadhaar, ensure that your mobile number is linked to Aadhaar. Also, ensure that your PAN is linked with your Aadhaar number.

You will see a pop-up window on your screen. Tick the checkbox stating ‘I agree to validate my Aadhaar details’ and then click on ‘Generate Aadhaar OTP.

Enter the 6-digit OTP received on your registered mobile number and click on the ‘Validate’ button. On successful submission, your ITR will be verified.
Note: OTP will be valid only for 15 minutes.

Method 2: e-Verification Through Aadhaar OTP Already Available

If you already have Aadhaar OTP available with you: Select ‘I already have an OTP on Mobile number registered with Aadhaar’.

Enter the OTP and click on the ‘Continue’.

Method 3: e-Verification Through Existing EVC

If you already have an EVC code, select ‘I already have an Electronic Verification Code (EVC)’.

Enter the EVC and click on ‘Continue’.

Method 4: e-Verification Using Digital Signature Certificate (DSC)

However, if your books of accounts are audited, the return must be e-verified using a Digital Signature Certificate (DSC).

On the e-verify page, select the option ‘I would like to e-Verify using Digital Signature Certificate (DSC)’.

e-Verification Using Digital Signature Certificate

Now download and install the ’emsigner utility’.

verify with Digital Signature Certificate

After you download and install the emsigner utility, select the option ‘I have downloaded and installed emsigner utility’ and ‘Continue’.

Add the ‘provider’, ‘certificate’, and ‘provider password’ on the Data Sign page. Then, simply click on the ‘Sign’ button.

After completing the process, you will see a success message and a Transaction ID. Make sure to record the Transaction ID for future use. Additionally, a confirmation message will be sent to the email address and mobile number registered with the e-Filing portal.

Method 5: e-Verification Through Net Banking

If you want to e-verify using the net banking facility, you need to have an active net banking facility on your bank account.

Select ‘Through Net Banking’ option and click on ‘Continue’.

Choose your bank and click on ‘Continue’.

Review and acknowledge the disclaimer and ‘Continue’.

You will be redirected to the login page of your bank’s net banking portal.
Enter your net banking credentials
You will have an ‘e-verify your return’ option. Select that.
You will again be redirected to the e-filing portal.
Go to the respective ITR form and click on ‘e-verify.

Method 6: e-Verification Through Bank Account

To verify your bank account and generate an Electronic Verification Code (EVC), it is necessary to have a bank account that has been prevalidated. Prevalidation of your bank account is essential in order to receive an income tax refund.
To know how to prevalidate your bank account, click here
EVC will be generated and sent to your mobile number and email ID registered with your prevalidated and EVC-enabled bank account.
On the ‘e-Verify’ page, select ‘Through Bank Account’ and click ‘Continue’.

Enter the EVC received on your mobile number and email ID registered with your bank account and click on the ‘e-verify’ button.

Enter the EVC received on your mobile number and email ID

Method 7: e-Verification Through Demat Account

Verifying ITR through a Demat account is similar to verification via a bank account.
The only difference is that the EVC will be generated and sent to your mobile number and email ID registered with your prevalidated and EVC-enabled Demat account.
On the ‘e-Verify’ page, select ‘Through Demat Account’ and click ‘Continue’

Enter EVC received and click on the ‘e-Verify’ button.

Method 8: e-Verification Through Bank ATM

There is another offline method of generating EVC. It is through bank ATM cards. This facility is available only for limited banks such as Canara Bank, Axis Bank, Central Bank of India, SBI, ICICI Bank, IDBI Bank, and Kotak Mahindra Bank. All you will need to do is visit your bank’s ATM and swipe your ATM card.

Enter your ATM PIN and select ‘Generate EVC for income tax filing’.
An EVC will be sent to your mobile number and email ID registered with the e-filing portal. It is important to note that your PAN must be registered with the bank.
Next, log in to your account and select ‘I already have an Electronic Verification Code (EVC)’. Now, enter the EVC code and click on e-verify.

Note:

If you want to e-verify without login to your e-filing account, please visit this page.
If you want to verify your ITR offline, download ITR acknowledgment and send the physical ITR receipt to the CPC. Know the steps for sending the physical copy of ITR-V.

Frequently Asked Questions

Is it mandatory to verify ITR?

Uploading ITR alone does not complete the return filing process. Verification of return is important to complete the return filing process.

Is it possible to verify my returns online if I filed them over 30 days ago and the 30 day time limit has elapsed?

Yes, you can still verify your returns online. However, you will need to submit a ‘condonation request’ for condonation of delay, providing a valid reason for the delay. The verification of your return will only be considered complete after the Income Tax Department approves the condonation request.

Can someone else verify my return on my behalf, such as an Authorized Signatory or Representative Assessee?

Yes, an Authorized Signatory or Representative Assessee can e-Verify your return on your behalf. They can use any of the following methods:

Aadhaar OTP: An OTP will be sent to the mobile number registered with Aadhaar of the Authorized Signatory or Representative Assessee.
Net Banking: An EVC generated through net banking will be sent to the mobile number and email ID registered with the e-filing portal of the Authorized Signatory or Representative Assessee.
Bank Account / Demat Account EVC: An EVC generated through the pre-validated and EVC-enabled bank account or demat account will be sent to the mobile number and email ID registered with the e-filing portal of the Authorized Signatory or Representative Assessee.

How will I know that my e-Verification is complete?

If you are e-Verifying your own return, the following will indicate that your return has been verified:

A success message will be displayed, along with a Transaction ID.
An email will be sent to the email ID registered with the e-filing portal.

If an Authorized Signatory or Representative Assessee is e-Verifying on your behalf, the following will indicate that your return has been verified:

A success message will be displayed, along with a Transaction ID.
After successful verification, an email confirmation will be sent to the primary email ID of both the Authorized Signatory or Representative Assessee and your email ID.

If my registered mobile number is not updated with Aadhaar, can I still e-verify my return using Aadhaar OTP?

No, you need to update your mobile number with Aadhaar to e-verify your return using Aadhaar OTP.

If my demat account or bank account is inactive, can I still e-verify my return using it?

No, you need to have an active demat or bank account that is pre-validated and EVC-enabled on the e-filing portal to e-verify your return using your demat account or bank account.

Will there be any penalty for delaying the e-Verification process?

If you fail to verify your return on time, it will be considered as if you have not filed your return, resulting in the consequences associated with not filing a return. However, you can request condonation of delay by providing an appropriate reason. Only after submitting such a request and having it approved by the Income Tax Authority, your return will be considered valid.

How can I verify my return?

You can verify your return electronically. You can e-verify your return on ClearTax. See the steps given above. An online e-verification can be done using any of these methods:

OTP on mobile number registered with Aadhaar, or
Net Banking, or
EVC generated through your pre-validated demat account, or
EVC generated through your pre-validated bank account, or
EVC through ATM (offline method), or
Digital Signature Certificate (DSC).
Aadhaar OTP or EVC generated through net banking, bank account, or Demat account.

If you cannot e-verify your return, you can download the return filing acknowledgement, i.e. ITR-V, print, sign, and send the same to the CPC, Bangalore, to process your return.

Further, suppose you are filing a return manually (if you are not bound to file your return online). In that case, you may sign your return of income for verifying it and submit the same in the office of your jurisdictional income.

What is the ‘capacity’ column in the verification tab of the income tax return?

A return can be verified and signed by the individual himself or any person authorised under Section 140(a). Following are the cases where a person other than the individual can sign:

Where the individual is not in India– any person he authorises to sign on his behalf
If he is mentally incapacitated– his guardian or any other person competent to act on his behalf
For any other reason– if the individual is unable to sign, any person whom he authorises to sign on his behalf

How can one generate an Aadhaar OTP to e-verify return?

After filing ITR, it can be e-verified using an Aadhaar OTP. To e-verify through Aadhaar, you must link your Aadhaar with your PAN and registered mobile number. After doing so, follow the below steps to e-verify:

Click on the ‘e-File’ menu and select ‘e-Verify Return’.
Click on the e-verify link and select Option 3 – ‘I would like to e-verify using OTP on a mobile number registered with Aadhaar’.
You will get an OTP on your registered mobile number.
Enter the OTP and click on the ‘Validate’ button

I have e-filed my return. I have printed my ITR-V, signed it, and sent it to CPC. However, I have received a notice from CPC that they have not received ITR-V yet. Also, 30 days from when I filed my return has also lapsed. What should I do?

You may resend your ITR-V once again to CPC. You will not be treated as a taxpayer not having filed his return as long as you can show sufficient proof of having sent the ITR V to CPC for the first time.

Changes in Tax Deposition and Annual Information Statement (AIS) Reporting

The Annual Information Statement (AIS) is required to show the record of all the tax deposited by an individual during the financial year. However, there may be instances where self-assessment tax paid by you while filing ITR for FY 2022-23 (AY 2023-24) is not showing in the AIS for the same financial year.

What is the problem?

This year the income tax department has made changes in how the tax paid/deposited is shown to the individual. Any tax deducted at source (TDS) or tax collected at source (TCS) continues to be reflected in one’s Form 26AS. However, any self-assessment tax and advance tax will be reflected in the AIS. Earlier, all the tax payments were reflected in Form 26AS.

An individual filing ITR will now be required to check both Form 26AS and AIS to know the total amount of tax deposited against his/her PAN.

The self-assessment tax, i.e., the tax paid while filing ITR for FY 2022-23 (AY 2023-24) must be reflected in the AIS for FY 2022-23. However, for some, their AIS for FY 2022-23 was not showing the self-assessment tax deposited.

Where to check the taxes paid while filing ITR

An individual depositing the income taxes while filing ITR for FY 2023-24 will be required to download the AIS for FY 2023-24 to ensure that self-assessment tax payments made at the time of ITR filing for FY 2022-23 are reflected.

According to Mihir Tanna, Associate Director (Direct Tax), S.K. Patodia and Associates, a Mumbai-based CA firm, “Earlier, in Form 26AS details of all taxes paid would appear in the year in which it is pertaining to. But now self-assessment tax paid for FY 2022-23, will appear in AIS of FY 2023-24 as the same is paid in FY 2023-24. So, taxpayers will find some difficulty initially in understanding the said changes.”

Why has this problem occurred?

Experts say that this is not a problem, rather it is a situation of interpreting the change.

“Currently, AIS is considering the tax challan based on the date on which it is paid, irrespective of the year for which the challan is being paid. For instance, if an individual has paid a self-assessment challan for the Financial Year 2022-23 in the month of July 2023, i.e., in the Financial Year 2023-24, it is getting reflected in the AIS of Financial Year 2023-24,” said Ankit Jain, Partner, Ved Jain and Associates, a Delhi based CA firm.

What is the solution to this problem?

Experts say that this situation does cause confusion for the taxpayers. “Hence, the government should try to correct the format since it makes more sense to have all the data relating to the same financial year in the single AIS,” said Jain.

“However, the taxpayers should not worry. They should simply check two documents at the time of ITR filing – first is AIS of next year for confirming that details of self-assessment tax and advance tax and second is Form 26AS of the relevant financial year of which ITR is being filed for confirming the details of TDS and TCS,” said Tanna.

“As long as the challan has been paid for the correct financial year, and the particulars filled in the ITR, i.e., the date, amount and BSR code, match with the challan, one will get credit for the taxes paid. The year in which the challan reflects is not of any relevance,” said Jain from Ved Jain Associates.

What if income tax details are not reflected in any AIS

“If a taxpayer has paid their self-assessment tax and it is neither showing up in the previous year’s AIS nor in the current financial year’s AIS. The taxpayer may have inputted the wrong assessment year at the time of tax payment. The only way to correct this error is to physically visit one’s nearest income tax office,” said CA Abhinit Singh, founder, Ready Accountant, a Kolkata-based educational institution.

Income Tax Return Guidelines under clause (10D) of section 10 of the Income-tax Act, 1961 – reg.

Sub: Guidelines under clause (10D) of section 10 of the Income-tax Act, 1961 – reg.: Clause (10D) of section 10 of the Income-tax Act, 1961 (the Act) provides for income-tax exemption on any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy subject to certain exclusions.

The Finance Act, 2023 (Finance Act), inter-alia,

amended clause (10D) of section 10 of the Act by substituting the existing sixth proviso with the new sixth, seventh and eighth provisos to, inter-alia, provide that:

(i) with effect from assessment year 2024-25, the sum received under a life

insurance policy, other than a unit linked insurance policy, issued on or after the 1s day of April, 2023, shall not be exempt under the said clause if the amount of premium payable for any of the previous years during the term of such policy exceeds Rs 5,00,000 [sixth proviso]; (ii) if premium is payable for more than one life insurance policy, other than a

unit linked insurance policy, issued on or after 01.04.2023, the exemption under the said clause shall be available only with respect to such policies where the aggregate premium does not exceed Rs 5,00,000 for any of the previous years during the term of any of those policies [seventh proviso]; (iii) the sixth and seventh provisos shall not apply in case of any sum received on the death of a person [eighth proviso]

II inserted a new clause (xiii) in sub-section (2) of section 56 to provide that where any sum is received, including the amount allocated by way of bonus, at any time during a previous year, under a life insurance policy, other than the sum,

Circular No. 15 of 2023

a. received under a unit linked insurance policy, or

b. being the income referred to in clause (iv) of sub-section 2,

which is not to be excluded from the total income of the previous year in accordance with the provisions of clause (10D) of section 10, the sum so received as exceeds the – aggregate of the premium paid, during the term of such life insurance policy, and not claimed as deduction in any other provision of the Act, computed in the manner as may be prescribed shall be chargeable to income-tax under the head “Income from other sources”;

inserted a sub-clause (xviid) in clause (24) of section 2 to provide that income shall include any sum referred to in clause (xiii) of sub-section (2) of section 56.

2.1 It may be noted that Finance Act, 2021 had earlier inserted, fourth to seventh provisos in clause (10D) of section 10 to provide that the sum received under any unit linked insurance policy [ULIP] (except any such sum received on the death of a person), issued on or after the – 01.02.2021 shall not be exempt under said clause, if the amount of premium payable for any of the previous years during the term of such policy exceeds Rs 2,50,000 (fourth proviso). It was also provided that if the premium is payable for more than one ULIPs, issued on or after the 01.02.2021, the exemption under the said clause shall be available only with respect to such policies where the aggregate premium does not exceed Rs 2,50,000 for any of the – previous years during the term of any of the policies (fifth proviso).

Issuance of Guidelines for removal of difficulties

Ninth proviso to clause (10D) of section 10 of the Act also empowers the Central Board of Direct Taxes (Board) to issue guidelines, with the previous approval of the Central Government, in order to remove any difficulty which arises while giving effect to the provisions of the said clause. In exercise of the powers under this proviso, Board, with the previous approval of the Central Government, hereby issues the following guidelines.

Guidelines

4. In these guidelines:

(i) “eligible life insurance policy” means any life insurance policy (other than unit linked insurance policy) issued on or after 01.04.2023;

(ii) “consideration” means sum received (of any nature including bonus) under an eligible life insurance policy

(iii)”current previous year” means the previous year in which consideration is received and its taxability is being examined.

4.1 Consideration received during the previous year under an eligible life insurance policy shall be exempt or not exempt under clause (10D) of section 10 of the Act, subject to the satisfaction of other provisions of said clause. The same are explained by way of examples of different situations:

4.2 Situation1: No consideration is received by the assessee on any eligible life insurance policies during any previous year preceding the current previous year or consideration has been received on such eligible life insurance policies but has not been claimed exempt. The exemption under clause (10D) of section 10 of the Act shall be determined as under:

i. If the assessee has received consideration, during the current previous year, under one eligible life insurance policy only and the amount of premium payable on such eligible life insurance policy does not exceed Rs 5,00,000 for any of the previous years during the term of such eligible life insurance policy, such consideration shall be eligible for exemption under the said clause (10D) subject to fulfilment of other conditions;

ii. If the assessee has received consideration, during the current previous year, under one eligible life insurance policy only and the amount of premium payable on sucha eligible life insurance policy exceeds Rs 5,00,000 for any of the previous years during the term of such eligible life insurance policy, such consideration shall not be eligible

for exemption under the said clause (10D);

iii. If the assessee has received consideration, during the current previous year, under more than one eligible life insurance policies and the aggregate of the amount of premium payable on such eligible life insurance policies does not exceed Rs 5,00,000 for any of the previous years during the term of such eligible life insurance policies, such consideration shall be eligible for exemption under the said clause (10D) subject to fulfilment of other conditions;

iv. If the assessee has received consideration, during the current previous year, under more than one eligible life insurance policies and the aggregate of the amount of premium payable on such eligible life insurance policies exceeds Rs 5,00,000 for any

of the previous years during the term of such eligible life insurance policies, the consideration under only such eligible life insurance policies shall be eligible for exemption under the said clause (10D) where aggregate of the amount of the premium payable does not exceed Rs 5,00,000 for any of the previous years during their terma (Refer Examples) subject to fulfilment of other conditions.

4.3 Situation 2: Consideration has been received by the assessee under any one or more eligible life insurance policies during any previous year preceding the current previous year and it has been claimed exempt under clause (10D) of section 10 of the Act. Such eligible life insurance policies are referred as “old eligible life insurance policies” in this paragraph and corresponding examples and reference to eligible life insurance policies in this paragraph and corresponding examples shall not include old eligible life insurance policies. The exemption under clause (10D) of section 10 of the Act shall be determined as under:

i. If the assessee has received consideration, during the current previous year, undera one eligible life insurance policy only and aggregate amount of premium payable on such eligible life insurance policy and old eligible life insurance policies does not exceed Rs 5,00,000 for any of the previous year during the term of such eligible life insurance policy, the consideration under such eligible life insurance policy shall be eligible for exemption under the said clause (10D) provided it is not excluded under sub-clauses (a) to (d) of said clause (10D);

ii. If the assessee has received consideration, during the current previous year, under one eligible life insurance policy only and aggregate amount of premium payable on such eligible life insurance policy and old eligible life insurance policies exceeds Rs 5,00,000 for any of the previous year during the term of such eligible life insurance policy, the consideration under such eligible life insurance policy shall not be eligible for exemption under the said clause (10D);

iii. If the assessee has received consideration, during the current previous year, under more than one eligible life insurance policies and aggregate of the amount of premium payable on such eligible life insurance policies and old eligible life insurance policies does not exceeds Rs 5,00,000 for any of the previous years during the term of such eligible life insurance policies, such consideration shall be eligible for exemption under the said clause (10D) provided it is not excluded under sub clauses (a) to (d) of said clause (10D);

iv. If the assessee has received consideration, during the current previous year, under more than one eligible life insurance policies and aggregate of the amount of premium payable on such eligible life insurance policies and old eligible life insurance policies exceeds Rs 5,00,000 for any of the previous years during the term of such eligible life insurance policies, consideration under only such eligible life insurance policies shall be eligible for exemption under the said clause (10D) where aggregate amount of premium along with the aggregate amount of premium of old eligible life insurance policies does not exceed Rs 5,00,000 for any of the previous years during the term of any of such eligible life insurance policies (Refer examples) provided it is not excluded under sub-clauses (a) to (d) of said clause (10D).

4.4 The above guidelines are explained with the help of the following examples:

Example 1:

The assessee has the following policy which satisfies all the conditions laid down in clause (10D) of section 10 of the Act (other than the conditions provided under the sixth and seventh proviso of the said clause, applicability whereof is being explained in the example).

Taxability as per sixth proviso to clause (10D) of section 10 of the Act:

The sum received on maturity will be exempt under clause (10D) of section 10 of the Act as the policy has been issued before 01.04.2023 and accordingly not covered by the 6th to 8th provisos to the said clause (10) of section 10 of the Act, as substituted by Finance Act, 2023.

Example 2:

Taxability as per seventh proviso to clause (10D) of section 10 of the Act:

The surrender value of life insurance policy “X” and consideration received under life insurance policy “Y” on maturity will be exempt under clause (10D) of section 10 of

the Act since the annual premium does not exceed Rs 5,00,000 during the term of these policies.

The consideration received under life insurance policies “A”, “B” and “C” will be taxable under clause (10D) of section 10 of the Act as per the provisions of seventh proviso to the said clause (10D) since aggregate of the annual premium payable for the life insurance policies “X” and “Y” for the previous year 2023-24 to 2033-34 was Rs 4,00,000. If the annual premium of life insurance policies “A” or “B” or “C” is added then the aggregate of the premium will exceed Rs 5,00,000 for the previous year 2024-25 to 2033-34.

As per the provisions of seventh proviso, in case of multiple life insurance policies, the aggregate of the premium payable for all the policies which are claimed to be exempt under clause (10D) of section 10 of the Act shall not exceed Rs 5,00,000 for any previous year during the term of any of those policies.

Example 12: If in Example 11, the assessee does not claim exemption with respect to the surrender value of life insurance policy “X”, then the consideration received under life insurance policy “Y” will be exempt for the previous year 2034-25 and the consideration received under life insurance policy “B” will be exempt for the previous year 2035-36 under clause (10D) of section 10 of the Act. The exemption is restricted to life insurance policy “B” since the aggregate of the annual premium payable for the life insurance policies “Y” and “B” together did not exceed Rs 5,00,000 for any of the previous years during the term of life insurance policies “Y” or “B” and the assessee did not claim life insurance policy “X” as exempt. Life insurance policy “B” is preferred in place of life insurance policy “A” as it is more beneficial to the assessee.

Example 13: The assessee has the following life insurance policies and unit linked insurance policies (ULIPs) all of which satisfy all the conditions laid down in clause (10D) of section 10 of the Act (other than the conditions provided under the fourth, fifth, sixth and seventh provisos of the said clause, applicability whereof is being explained in the example). The assessee did not receive any consideration under any other eligible life insurance policies or unit liked insurance policies in earlier previous years preceding the previous year 2033-34 other than under unit liked insurance policy “X” and under life insurance policy “A”.

Taxability as per fifth and seventh proviso to clause (10D) of section 10 of the Act:

As per the fifth proviso, the surrender value of unit linked insurance policy “X” anda consideration received under unit linked insurance policy “Y” on maturity will be exempt under clause (10D) of section 10 of the Act since the annual premium does not exceed Rs 2,50,000 during the term of these policies.

⚫ Further, the consideration received under the life insurance policy “A” during the previous year 2033-34 shall be exempt under clause (10D) of section 10 of the Act and will become old eligible life insurance policy for which exemption has been claimed. Then, for the previous year 2034-35, the consideration for life insurance policy “C” only shall be exempt under clause (10D) of section 10 of the Act as the sum of premium of life insurance policies “A” and “C” does not exceed Rs 5,00,000 in any of the previous years during the term of these policies. The consideration for life insurance policy “B” is not exempt since sum of premium of life insurance policies “A”, “B” and “C” exceeds Rs 5,00,000 during the term of these policies. Life insurance policy “C” is preferred over life insurance policy “B” being more beneficial to the assessee. However, if the consideration from life insurance policy “A” was not claimed as exempt in previous year 2033-34, then the consideration from both the life insurance policies “B” and “C” shall be exempt under clause (10D) of section 10 of the Act.

Clarification on GST Component

In addition to the above, it is also clarified that the premium payable/ aggregate premium payable for a life insurance policy/ policies, other than a unit linked insurance policy, issued on or after the 1st day of April, 2023, for any previous year, shall be exclusive of the amount of the Goods and Service Tax payable on such premium. This can be explained by the following example:

Clarity on premium of Term life insurance policy

It is further clarified that the provision of the sixth and seventh proviso of clause (10D) of section 10 shall not be applicable in case of a term life insurance policy i.e. where sum under a life insurance policy is only paid to the nominee in case of the death of the person insured during the term of the policy and no amount is paid to anyone if the insured person survives the policy tenure. Hence, any sum received under a term insurance policy shall continue to be exempt under clause (10D) of section 10 of the Act, irrespective of the amount of the premium payable in respect of such policy. Further the premium paid for such policies shall not be counted for checking Rs 5,00,000 limit for the purposes of sixth and seventh proviso.

circular-15-2023Download

Can Salaried Individuals Opt for the New Tax Regime in Belated ITR for FY 2022-23?

The deadline for filing an original ITR for FY 2022-23 (AY 2023-24) was July 31, 2023. However, if an individual has missed this deadline, there is no need to worry for one can still file ITR by paying a penalty. This ITR, which is filed after expiry of the deadline of the original ITR, is called a belated ITR. The last date to file belated ITR for FY 2022-23 (AY-2023-24) is December 31, 2023.

To file a belated ITR an individual has to pay a penalty of Rs 5,000 if net taxable income is above Rs 5 lakh or Rs 1,000 if net taxable income is below Rs 5 lakh. Penal interest on the income tax due, if any, will also have to be paid.

A belated ITR is filed in a similar manner as an original ITR with some differences.. But if you want to switch the tax regime (from that chosen in the previous year), while filing a belated ITR, then it is a different matter and is dependent upon your source of income. For example, there could be a case where a person who filed ITR under old tax regime for FY 2021-22 wants to file a belated ITR for FY 2022-23 under new tax regime.

Can salaried people opt for new tax regime for FY 2022-23 in belated ITR?

If an individual has income from salary, house property, or other sources but no income from business or profession in FY 2022-23, then the only way one can opt for new tax regime for FY 2022-23 (AY 2023-24) is by filing their ITR by July 31, 2023 (original ITR)

If a individual is filing belated return under section 139(4) for FY 2022-23 (AY 2023-24), then new tax regime cannot be opted

Who can switch to the new tax regime in belated ITR for AY 2023-24?

Those with business or professional income can opt in or opt out of the new tax regime by communicating the choice of tax regime to the income tax department by filing Form 10-IE.

Switching to new tax regime in belated ITR

“The decision to opt in (for new regime) for individuals having business/profession income for FY 2022-23 (AY 2023-24) has to be made by furnishing Form 10-IE on or before the due date for filing original return of income under section 139(1). Once Form 10-IE is filed within the due date for filing original ITR , the claim for new tax regime can be made in original ITR under section 139(1) or belated return under section 139(4),” according to Amarpal S. Chadha, Tax Partner and Mobility Leader, EY India, a consultancy company.

According to CA Manas Chugh, head, regulatory services, Osgan Consultants, a Delhi based tax and business consultancy company, “Once Form 10-IE is filed, it is applicable for subsequent years, unless another Form 10-IE is filed withdrawing the consent of regime change. Hence if an individual has already submitted Form 10-IE in FY 2021-22 by the original ITR due date to opt for new tax regime, he can continue to file ITR (original or belated) in new tax regime for FY 2022-23 (AY 2023-24).”

The due date for ITR filing is July 31, 2023 for those tax filers who are not required to get their accounts audited for income tax purposes. For those who are required to get their accounts audited, the ITR deadline is October 31, 2023.

Changing tax regimes is allowed only once in a lifetime for business persons/ professionals
“Individuals having income from business or profession are not eligible to choose the tax regime every year. Upon selecting the new tax regime, they have a once-in-a lifetime option for switching back to the old tax regime. Once they switch back to the old tax regime, they cannot choose the new tax regime anytime in the future.

This is relevant for FY 2022-23 (AY 2023-24) as the law regarding the default tax regime has changed from FY 2023-24 (AY 2024-25) onwards.

Switching from new to old tax regime in belated ITR may not be possible in all cases

Experts say that the Income Tax Act mentions that to opt out of the old tax regime and go into the new tax regime, Form 10-IE has to be filed before the ITR deadline. However the law relating to the opposite i.e. to opt out of the new tax regime and switch to the old tax regime is not clear.

According to Mitesh Jain, Partner, Economic Laws Practice, a Delhi based law firm, “The provision of the Income-tax Act, 1961 permitting withdrawal from the new regime does not specifically provide a time limit for opting out of the new regime.”

“Therefore, on a plain reading of the provisions, the assessee may exercise the said withdrawal option under original or revised or belated return by filing Form 10-IE before filing ITR,” says Jain.

However, there is a possibility of the tax department raising objections/sending notice regarding the withdrawal from the new regime if Form 10-IE is filed after the due date of filing original ITR, Jain added.

GUIDELINES FOR COMPULSORY INCOME TAX SCRUTINY – FY 2023-24 CLARIFICATION

Central Board of Direct Taxes has issued guidelines for the compulsory selection of returns for Complete Scrutiny during the Financial Year 2023-24. These guidelines aim to clarify the procedure for compulsory selection in such cases.

The guidelines, F. No. 225/66/2023 — ITA-II, dated August 31, 2023, address the selection of cases for complete scrutiny based on certain parameters. Parameter 4 of the guidelines specifically deals with cases in which notices under Section 148 of the Income-tax Act, 1961, have been issued. The cases covered under this parameter are those where the return is either furnished or not furnished in response to the notice.

The guidelines further clarify the treatment of non-search cases where information related to other persons is found during the course of search & seizure action. It is explained that such non-search cases do not need to be transferred to the Central Charges unless covered by specific Board guidelines.

Subject: Guidelines for compulsory selection of returns for Complete Scrutiny during the Financial Year 2023-24 — procedure for compulsory selection in such cases — clarification-reg.

Kindly refer to Boards’ Guidelines dated 24.05.2023 issued from F.No. 225/66/2023 /ITA-II on the above subject. Based on these guidelines, various letters/queries have been received in the Board from DsGIT(Inv.) and CCsIT(Central) regarding centralization of cases u/s 127 of the Income-tax Act,1961 (`the Act’) subsequent to issuance of notices u/s 143(2)/142(1) of the Act in various category of cases.

2. Parameter 4 of Para 2 of the above-referred to Guidelines dated 24.05.2023 reads as under:

3. During the course of Search & Seizure action, information relating to some other persons, who may have one-off/very few or limited financial transaction(s) with the main assessee group covered in the search u/s 132/132A of the Act, may be found. Such persons are not integrally connected with the core business of the main assessee searched and do not belong to the same business group. Often such persons are also not residing in the same city as that of the main assessee. In such cases, the relevant information is generally passed on to the jurisdictional AO for assessing them u/s 148(for searches conducted/requisition made after 01.04.2021) of the Income-tax Act, 1961.

4. Accordingly, with reference to Parameter 4 of Para 2 of the above-referred to Guidelines dated 24.05.2023, it is clarified that all such non-search cases selected are not required to be transferred to the Central Charges unless covered by the Board’s guidelines under F.No. 299/107/2013-IT(Inv.III)/1568 dated 25.04.2014.

5. The above may be brought to the notice of all concerned for necessary compliance.

(Castro Jayaprakash.T) Under Secretary (ITA-II), CBDT

ITR Filing AY 2023-24 Latest Updates from Income Tax Department

Out of 6.81 crore filed ITRs, more than 6 crore ITRs have already verified

Kindly note that the time limit to verify ITR is 30 days from the date of filing the ITR

After 30 days, No option of Condonation of Delay so if verification is pending then kindly verify it within time limit.

How to e-Verify Your Income Tax Returns

How to e-Verify

1. Why do I need to e-Verify?
You need to verify your Income Tax Returns to complete the return filing process. Without verification within the stipulated time, an ITR is treated as invalid. e-Verification is the most convenient and instant way to verify your ITR.

You can also e-Verify other requests / responses / services to complete the respective processes successfully, including verification of:

Income Tax Forms (through online portal / offline utility)
e-Proceedings
Refund Reissue Requests
Rectification Requests
Condonation of Delay in filing ITR after due Date
Service Requests (submitted by ERIs)
Uploading ITR in bulk (by ERIs)

2. What are the different ways in which I can e-Verify my returns?
You can e-Verify your returns online using:

OTP on mobile number registered with Aadhaar, or
EVC generated through your pre-validated bank account, or
EVC generated through your pre-validated demat account, or
EVC through ATM (offline method), or
Net Banking, or
Digital Signature Certificate (DSC).

3. I have filed my return more than 120 days ago. Can I still verify my returns online?
Yes. You need to submit request for condonation of delay (refer to the Service Request user manual) by providing an appropriate reason for the delay. But the return will be taken as verified only after approval of the condonation request by the Income Tax Department.

4. Can an Authorized Signatory / Representative Assessee e-Verify the return on my behalf?
Yes. The Authorized Signatory / Representative Assessee can e-Verify the return on behalf of the assessee using any of the following methods:

Aadhaar OTP: OTP will be sent to the Authorized Signatory’s / Representative Assessee’s mobile number registered with Aadhaar.
Net Banking: EVC generated through net banking will be sent to the Authorized Signatory’s / Representative Assessee’s mobile number and email ID registered with the e-Filing portal.
Bank Account / Demat Account EVC: EVC generated through the pre-validated and EVC-enabled bank account / demat account will be sent to the Authorized Signatory’s / Representative Assessee’s mobile number and email ID registered with the e-Filing portal.

5. How will I know that my e-Verification is complete?
In case you are e-Verifying your return:

A success message will be displayed along with a Transaction ID
An email will be sent to your email ID registered with the e-Filing portal

In case you are an Authorized Signatory / Representative Assessee:

A success message will be displayed along with a Transaction ID
After successful verification, an email confirmation will be sent to the primary email ID of both Authorized Signatory’s / Representative Assessee’s and your email ID registered with e-Filing portal

6. When am I required to file / apply for condonation of delay?
It is suggested to file a condonation request as soon as you notice that you have not verified your return even after 120 / 30 days of filing.

Important Note:

Please note vide Notification No. 5/2022 dated 29.07.2022, w.e.f. 01/08/2022 the time-limit for e-verification or submission of ITR-V shall be 30 days from the date of filing the return of income.

However, where the return is filed on or before 31.07.2022 the earlier time limit of 120 days would continue to apply.

7. My registered mobile number is not updated with Aadhaar, can I still e-Verify my return using Aadhaar OTP?
No. You need to update your mobile number with Aadhaar to e-Verify your return using Aadhaar OTP.

8. My demat account / bank account is inactive, can I e-Verify my return with this account?
No. You need to have an active demat account / bank account which needs to be pre-validated and EVC-enabled on e-Filing portal to e-Verify your return using your demat account / bank account.

9. Will delay in e-Verification attract any penalty?
If you do not verify in time, your return is treated as not filed and it will attract all the consequences of not filing ITR under the Income Tax Act, 1961. However, you may request condonation of delay in verification by giving appropriate reason. Only after submission of such a request, you will be able to e-Verify your return. However, the return will be treated valid only once the condonation request has been approved by the competent Income Tax Authority.

10. What is EVC?
An Electronic Verification Code (EVC) is a 10-digit alpha-numeric code which is sent to your mobile number and email ID registered with the e-Filing portal / bank account / demat account (as the case may be) during the process of e-Verification. It has a 72-hour validity from the time of its generation.

11. What to do in case ITR-V is rejected?
You can see the reason for rejection on your e-Filing Dashboard. You may send another ITR-V or choose to e-Verify the ITR online.

12. What are the benefits of e-Verification?

You do not need to send a physical copy of your ITR-V to CPC, Bangalore.
Verification of your ITR happens instantly, which saves you from the delay in transit of ITR-V.
You can e-Verify using any of the various methods – Aadhaar OTP / EVC (using pre-validated bank / demat account) / Net Banking / Digital Signature Certificate (DSC).

13. Is it mandatory to e-Verify your return?
No. e-Verification is just one method of verifying your filed ITR. You can choose either of the two methods to verify your filed ITR:

e-Verify returns online, or
Send a physical copy of your duly signed ITR-V to CPC, Bangalore.

14. I have filed ITR and sent the physical copy of ITR-V to CPC. However, I received a notification from CPC that they have not received the ITR-V and 120 / 30 days have lapsed since the date of filing. What can I do?
You can e-Verify your ITR online after submitting a condonation request.

15. What is the difference between pre-login e-Verification and post-login e-Verification?
You can choose to e-Verify your filed ITR before or after logging in to e-Filing portal. The only difference is that while using the pre-login service, you will be required to provide the details of your filed ITR (PAN, Assessment Year and Acknowledgment Number) before e-Verifying the ITR. If you choose to use the post-login service, you will be able to choose the respective record of ITR filed rather than provide any such details before e-Verifying the ITR.

16. Can I e-Verify my ITR using Digital Signature Certificate?
Yes. DSC is one of the ways to e-Verify. However, you will be able to e-Verify using Digital Signature Certificate (DSC) immediately after filing your ITR.

You will not be able to choose DSC as a preferred option to e-Verify in case you have selected the e-Verify Later option while submitting Income Tax Returns.