The deadline for filing income tax audit reports for the financial year 2024-25 is fast approaching, with only two days remaining until October 31, 2025. The Central Board of Direct Taxes (CBDT) had previously extended the due date from September 30, 2025, providing taxpayers and professionals additional time to ensure compliance.
This extension applies to assessees mentioned in clause (a) of Explanation 2 to sub-section (1) of section 139, which primarily includes taxpayers who are required to have their accounts audited under Section 44AB of the Income Tax Act. This typically encompasses businesses and professionals whose income or turnover exceeds the statutory thresholds.
Who Needs a Tax Audit?
A tax audit under Section 44AB is mandatory for:
- Businesses with an annual turnover exceeding ₹1 crore. However, if cash receipts and payments are less than 5% of total transactions, this limit is increased to ₹10 crore. This means that at least 95% of transactions are conducted through banking or digital channels.
- Professionals, such as doctors, lawyers, architects, and chartered accountants, with annual gross receipts exceeding ₹50 lakh.
- Certain taxpayers under presumptive taxation schemes, including Section 44ADA, may also require an audit based on specific conditions.
Filing Process and Compliance
Tax auditors must submit their reports online using their Chartered Accountant credentials. Taxpayers then need to either accept or reject the report through their portal login. If the report is rejected, it must be revised and resubmitted until it is accepted. For taxpayers involved in international transactions, the audit report must also be filed by October 31 of the subsequent assessment year.
Penalties for Non-Compliance
Missing the October 31 deadline can lead to significant financial penalties under Section 271B of the Income Tax Act. The penalty is equivalent to 0.5% of the total turnover, sales, or gross receipts, or ₹1,50,000, whichever is lower. For example, a business with a turnover of ₹2 crore could face a penalty of ₹1 lakh.
However, there are recognized exceptions for genuine reasons such as natural calamities, resignation of the auditor, labor strikes, loss of records, or the death or incapacitation of the partner in charge.
Other Key Dates
October 31, 2025, also marks the due date for filing Income Tax Returns (ITR) for entities that are required to undergo an audit, including companies, firms, and partners of audited firms. Additionally, it is also the due date for filing the TDS return for the second quarter (July to September) of the Financial Year 2025–26.
Consequences of Late Filing
Failure to file the Tax Audit Report (Form 3CD) on time can result in a penalty of up to ₹1,50,000 or 0.5% of turnover, whichever is lower. Late filing of the ITR may lead to a late fee of up to ₹5,000, along with interest on unpaid taxes. Critically, business losses or capital losses cannot be carried forward to the next year if the return is not filed by the due date. Delays in TDS returns incur a penalty of ₹200 per day and can affect the issuance of Form 16A, impacting employees and vendors who rely on it for tax credits.
Given the approaching deadline and potential penalties, it is crucial for businesses and professionals to prioritize the completion of their income tax audits and ensure timely filing of reports. Consulting with chartered accountants, verifying all postings, and maintaining open communication with auditors are highly recommended.
