Introduction:
The Income Tax Audit under Section 44AB of the Income Tax Act, 1961, is a mandatory examination of books of accounts for certain taxpayers to ensure compliance with tax laws and accurate reporting of income. For Assessment Year (AY) 2025-26 (Financial Year FY 2024-25), the provisions remain largely unchanged from previous years, but with heightened scrutiny due to e-filing portal issues and calls for extensions from bodies like ICAI. The audit is required for businesses with turnover exceeding ₹1 crore (relaxed to ₹10 crore if cash receipts/payments are less than 5% of total) and professionals with gross receipts over ₹50 lakh (₹75 lakh under the cash threshold). The audit report, in Form 3CA/3CB along with particulars in Form 3CD, must be obtained from a chartered accountant and e-filed by September 30, 2025. For taxpayers also subject to transfer pricing audit under Section 92E, the deadline extends to October 31, 2025. Failure to file attracts a penalty of 0.5% of total sales, turnover, or receipts (capped at ₹1.5 lakh), though it can be waived if reasonable cause is shown. The Income Tax Return (ITR) for audit cases is due by October 31, 2025, and without the audit report, the return is invalid. As of September 25, 2025, 10:00 AM IST, portal glitches have prompted ICAI and chambers to request a two-month extension to November 30, but no official announcement has been made. This guide covers who needs the audit, due dates, forms, penalties, exemptions, process, historical context, statistics, expert advice, and FAQs.
Who Needs a Tax Audit?
Businesses
- Turnover > ₹1 crore (normal).
-
₹10 crore if cash transactions <5% of total receipts/payments (higher limit for digital compliance).
Professionals
- Gross receipts > ₹50 lakh.
-
₹75 lakh if cash <5%.
Presumptive Taxation Opt-Out
Opting out of Sections 44AD/44ADA/44AE triggers audit if income exceeds 8%/6% of turnover.
Due Dates and Extensions
- Audit Report: September 30, 2025 (October 31 for transfer pricing).
- ITR Filing: October 31, 2025 for audit cases.
- Extension Requests: ICAI seeks December 31 due to glitches; no CBDT confirmation yet.
Audit Forms and Process
- Form 3CA: For audited accounts under other laws (e.g., Companies Act).
- Form 3CB: For non-audited accounts.
- Form 3CD: Particulars statement (140 clauses on books, expenses, etc.).
Process: Engage CA by July 31; file e-return with UDIN; upload to e-filing portal.
Penalties for Non-Compliance
- Section 271B: 0.5% of turnover (max ₹1.5 lakh).
- Waiver: Reasonable cause (e.g., portal issues) under Section 273B.
- ITR Invalidity: Without audit report, return defective.
Exemptions and Special Cases
- Presumptive Scheme: No audit if opting in (Sections 44AD/44ADA/44AE).
- Transfer Pricing: Extra time to October 31.
- Small Businesses: Cash threshold eases limit to ₹10 crore.
Historical Context
Introduced by Finance Act 1984, Section 44AB aimed to curb evasion. Thresholds raised in 2012 (₹10 lakh professionals) and 2017 (₹2 crore businesses). 2025 glitches echo 2023 portal crashes, prompting extensions.
Statistics
- Applicability: 10 lakh taxpayers annually.
- Turnover Threshold: ₹1 crore covers 90% small businesses.
- Penalties Collected: ₹500 crore in FY24.
| Category | Threshold | Audit Cases (Lakh) |
|---|---|---|
| Businesses | ₹1 Cr | 8 |
| Professionals | ₹50 Lakh | 2 |
Expert Opinions
ICAI: "Portal glitches justify extension to December."
Potential Impacts
Delays could lead to 20% more defective ITRs; extensions ease burden on CAs (5 lakh practitioners).
Conclusion
Income tax audit for AY 2025-26 requires Form 3CD by September 30, 2025. Engage CA early; check for extensions. Updates at nuvexic.com.
FAQ
-
What is the due date for filing the income tax audit report for FY 2024-25?
September 30, 2025, for most cases; October 31 for transfer pricing. -
Who is required to get a tax audit under Section 44AB?
Businesses with turnover > ₹1 crore (₹10 crore if cash <5%); professionals > ₹50 lakh (₹75 lakh if cash <5%). -
What is the penalty for not filing the tax audit report on time?
0.5% of turnover, max ₹1.5 lakh, waivable for reasonable cause. -
Which forms are used for tax audit reporting?
Form 3CA/3CB for report, Form 3CD for particulars. -
Can the penalty be waived if the deadline is missed?
Yes, under Section 273B for reasonable cause like portal glitches. -
What is the ITR filing deadline for audit cases?
October 31, 2025, but return invalid without audit report.