📄 What Is an Income Tax Audit & Why the Due Date Matters || ARC Worldwide

 

📄 What Is an Income Tax Audit & Why the Due Date Matters

Under Section 44AB of the Income Tax Act, 1961, certain businesses and professionals must get their accounts audited by a Chartered Accountant and file an audit report (Forms 3CA/3CB + 3CD) when their turnover, gross receipts or certain thresholds are exceeded (for example, businesses over ₹1 crore, professionals over ₹50 lakh, etc.).

The “audit report” (often called the Tax Audit Report or TAR) must be furnished by a “specified date” along with or before filing the income tax return. Missing that deadline can attract penalties under Section 271B.

Thus, the due date for the audit report is critical — it determines compliance, risk, and smooth filing of your ITR if audit is applicable.

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📅 Original Due Dates (Before Extension) — FY 2024-25 / AY 2025-26

• The usual “specified date” for furnishing the audit report (for previous year 2024-25, assessment year 2025-26) was 30 September 2025.

• That means, originally, you had to get your accounts audited and submit the audit report by September 30, 2025, if you're an assessee covered under audit requirements.

Those dates were part of the standard deadlines notified by CBDT and the Income Tax Department.

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📰 Latest Extension: CBDT Notification & What’s New

What’s the Extension?

• On 25 September 2025, the CBDT (Central Board of Direct Taxes) issued a press release and Circular 14/2025 extending the specified date for furnishing audit reports (for fiscal year 2024-25) from 30 September 2025 to 31 October 2025. Income Tax India+2Income Tax India+2

• This extension is applicable to assessees referred to in clause (a) of Explanation 2 to sub-section (1) of section 139 of the Act. Income Tax India+2The Times of India+2

• The press release clarifies that while the e-filing portal has been operating well and audit reports were being uploaded, the extension was granted after representations by professional bodies and the intervention of High Courts. The Times of India+3Income Tax India+3The Financial Express+3

Where It’s Not Extended

• The deadline for filing ITR (income tax return) for those required to do audit remains October 31, 2025 (or as per relevant rules), and as of the extension notice, there is no extension announced for ITR filing in audit cases beyond that. The Economic Times+2The Times of India+2

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🧾 Implications, Penalties & What Happens If You Miss the New Deadline

Penalties for Missing the Audit Report Deadline

• If you fail to furnish the audit report by 31 October 2025 (new extended deadline), the penalty under Section 271B may be invoked. mint+2The Times of India+2

• Penalty amount: 0.5% of your turnover or gross receipts, subject to a maximum of ₹1,50,000 (unless the taxpayer can demonstrate a “reasonable cause” for delay). mint+2The Times of India+2

• If there is a reasonable cause (floods, natural calamity, technical disruption etc.), the tax officer may waive or reduce the penalty. mint

Consequences for ITR Filing / Return Validity

• For those whose returns must include the audit report, if the audit report is not furnished before or along with the ITR, the return may be treated as defective under Section 139(9). The Times of India

• That could lead to notices, adjustment or disallowance of claims, or delay in refund.

• Even after the due date, you may still file the audit report (with penalty), but you lose the benefit of clean compliance.

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✅ What You Must Do Now (Checklist & Tips) 

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1. Confirm if you are liable for a tax audit (check thresholds under Section 44AB).

2. Get your accounts audited and prepare Forms 3CA / 3CB + 3CD as required.

3. File the audit report by 31 October 2025 (new extended date) via the e-filing portal.

4. File your ITR in time (with audit report) — ensure that audit report is attached or uploaded if required.

5. If you miss the deadline but have genuine cause (natural calamity, portal issues etc.), keep documentation to support a “reasonable cause” claim.

6. Pay close attention to the new schedule of audit work, gather books, invoices, bank statements, stock etc. early to avoid last-minute rush.

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