Tax audit due date remains Sept 30: No extension yet — Here’s how much penalty you could face for late filing

The deadline for taxpayers who are required to file their tax audit reports is just two days away. However, tax professionals and industry associations have been seeking an extension of the September 30 deadline to October 31.

As of now, no extension or other relief has been granted, making it important for taxpayers subject to tax audit to continue preparing themselves for the existing deadline unless the government announces any change.

Penalty, consequences for missing tax audit deadline

If you are unable to get your accounts audited and submit the report by Wednesday, September 30, you could face a penalty under Section 271B.

The levy is 0.5% of the total turnover or gross receipts, subject to the reasonable-cause relief available under Section 273B, as per information available on the official income tax department’s website.

Section 273B provides relief from penalties under various provisions of the Income-tax Act where the taxpayer can prove that the failure or default occurred due to a reasonable cause. It essentially ensures that penalties are levied only in cases of willful negligence or deliberate non-compliance.

If the delay in completing the audit also results in a delay in filing the income tax return (ITR) beyond the October, 31 deadline, the taxpayer may also have to pay interest under Section 234A, along with late filing fees. Additionally, a delayed return impacts the taxpayer’s ability to carry forward certain losses.

Who needs to file audit report by Sept 30?

The requirement of filing a tax audit report by September 30 is based on the nature of the activity and turnover or gross receipts.

For those operating businesses, a tax audit is generally required if their profits exceed ₹1 crore in a financial year. However, this limit increases to ₹10 crore where the cash receipts and cash payments levels are less than 5% of total receipts and payments, respectively.

For professionals, on the other hand, the general threshold for requiring a tax audit is ₹50 lakh in gross receipts.

This provision also applies to taxpayers opting out of presumptive taxation schemes under Sections 44AD, 44ADA, 44AE, 44BB, and 44BBB, or those declaring lower income than prescribed under these schemes, subject to conditions including exceeding the maximum exemption limit.

Why are tax professionals seeking an extension?

Tax professionals say a tax audit involves multiple checks and reconciliations, making it difficult to complete within the prescribed due date.

Citing a packed September compliance calendar as the reason, they noted that several tax and other statutory requirements are falling around the same period.

The process requires books of accounts to be matched with GST records, TDS and TCS details, AIS, TIS, Form 26AS, bank statements and other such records. Discrepancies also need to be investigated, along with obtaining supporting documents and reviewing disclosures before the audit can be finalised.

Professionals have also highlighted issues with tax utilities, technical difficulties and the time needed to incorporate changes and complete new reporting requirements, according to an Upstox report.

All these reasons collectively led to the demand for a deadline extension on social media platforms. The hashtag #ExtendTaxAuditDueDate is being used by tax professionals to highlight the pressure they say they are facing.