Tax audit deadline moved to Oct 31: Who needs to follow process, why

Tax audit deadline: One month more give to businesses and professionals after representations from industry groups

Tax audit Last Date: Businesses and professionals have more time to complete their statutory tax audits. The due date for filing income tax audit reports for the Financial Year 2024-25 (assessment year 2025–26) has been extended from September 30 to October 31, 2025.

 

The Central Board of Direct Taxes (CBDT) took the decision after representations from tax professionals and industry groups, which cited practical challenges in meeting the earlier deadline. Floods and other disruptions in parts of the country have slowed compliance.

 

Who needs a tax audit?

Not all taxpayers fall under the audit requirement. The Income Tax Act prescribes specific thresholds:

 

Businesses: Audit is mandatory if turnover exceeds Rs 1 crore. This limit increases to Rs 10 crore if cash transactions, both receipts and payments, do not exceed 5 per cent of total turnover.

 

Professionals: Doctors, lawyers, architects and consultants must undergo an audit if gross receipts exceed Rs 50 lakh. The limit rises to Rs 75 lakh for those with minimal cash dealings.

 

Presumptive taxpayers: Small businesses under Section 44AD and professionals under Section 44ADA are exempt from audits if they report income according to the prescribed presumptive rates. However, if profits fall below those rates or income exceeds the basic exemption limit, an audit becomes mandatory.

 

Common misconceptions

Experts say many taxpayers misinterpret audit rules. For instance, “digital transactions” cover all non-cash payments, including bank transfers and demand drafts, not just UPI or card payments. Similarly, presumptive taxation does not give immunity from audits; profits below the presumptive threshold can still trigger audit requirements.

 

Switching between presumptive and regular taxation frequently also carries restrictions and may disqualify exemptions in subsequent years.

 

What happens if you miss the Tax Audit deadline?

Filing Income Tax returns without audit reports is invalid. Missing the audit deadline can invite penalties of up to Rs 1.5 lakh or 0.5 per cent of turnover under Section 271B. Interest charges and late filing fees may also apply. Moreover, cases of non-compliance often attract stricter scrutiny in later years.

 

Why the Tax Audit extension matters

According to the CBDT, over 400,000 tax audit reports had already been filed by September 24, with more than 60,000 uploaded in a single day. Even so, the one-month extension offers breathing space to businesses and professionals struggling with documentation and verification.