In a move that brings relief to taxpayers and professionals alike, the government has extended the deadline to file the Income Tax Audit Report for the financial year 2023-24 to October 7. This extension comes after several representations were made by tax professionals and trade bodies, citing various challenges in meeting the original deadline of September 30.
This decision is expected to benefit a significant number of businesses and professionals who were struggling to meet the compliance requirements amidst the ongoing changes in tax laws and digital platforms. Here’s everything you need to know about the extended deadline and how it impacts taxpayers.
What is an Income Tax Audit Report?
An Income Tax Audit is a process of examining and verifying the books of accounts of a taxpayer to ensure compliance with the provisions of the Income Tax Act, 1961. If a taxpayer’s turnover exceeds a certain threshold, it is mandatory for them to get their accounts audited by a certified chartered accountant and submit the audit report to the Income Tax Department.
For businesses, this audit ensures that their financial statements present a fair and accurate view of their taxable income. The Income Tax Audit Report must be submitted electronically on the government’s tax portal, accompanied by various forms and documentation as required by law.
Original Deadline and Why It Was Extended
The original deadline for submitting the Income Tax Audit Report for FY 2023-24 was set for September 30. However, various stakeholders, including chartered accountants and business associations, raised concerns over the tight timeline. One of the primary reasons was the transition to new compliance requirements and the ongoing challenges posed by the digital platforms used for filing.
Technical glitches on the tax portal, delays in the finalization of financial statements due to last-minute clarifications by the government, and the overall complexity of the process added to the difficulties faced by taxpayers and auditors. Given these concerns, the Ministry of Finance considered the demands for an extension and ultimately pushed the deadline to October 7, providing an additional seven days for taxpayers to complete the filing process.
Who Benefits from the Deadline Extension?
The extension is particularly beneficial for businesses with turnovers exceeding ₹1 crore and professionals with incomes over ₹50 lakh, who are required to get their accounts audited under Section 44AB of the Income Tax Act. It also provides relief to companies and partnerships that were facing difficulties in complying with the audit requirements.
Additionally, this extension eases the burden on chartered accountants, who often handle multiple clients and face significant pressure to meet deadlines. With the additional time, professionals can now complete the audit process without rushing through the details, ensuring that all compliance measures are accurately met.
Key Points to Keep in Mind
New Deadline: The new deadline for filing the Income Tax Audit Report for FY 2023-24 is October 7, 2024.
Forms to be Filed: Taxpayers required to file the audit report must submit it along with Forms 3CA/3CB and 3CD, which are key forms in the audit process.
Penalties for Missing the Deadline: Failing to file the audit report by the new deadline may attract a penalty under Section 271B of the Income Tax Act, which could be as high as ₹1.5 lakh or 0.5% of total sales or turnover, whichever is lower.
How to File the Audit Report
To file the Income Tax Audit Report, taxpayers and their auditors need to follow these steps:
- Prepare the Report: Chartered accountants must prepare the audit report and ensure that it complies with all requirements under the Income Tax Act.
- Login to the Tax Portal: Both the taxpayer and the auditor need to access the Income Tax Department’s e-filing portal to upload the report.
- Submit the Necessary Forms: Along with the audit report, the required forms (3CA/3CB and 3CD) must be filled and submitted electronically.
- Review and Approve: After the auditor uploads the report, the taxpayer must review and approve it on the tax portal.
Impact on Taxpayers
This deadline extension provides much-needed breathing room for businesses and professionals. Many taxpayers had been facing challenges with the digital platforms for filing, and this extension offers additional time to sort out these issues. It also ensures that the filing process remains thorough and accurate, reducing the risk of errors that could lead to penalties.
For businesses, the audit report is crucial as it reflects the financial health of the organization. By allowing more time to complete the audit, the government is ensuring that taxpayers can provide accurate and detailed information, which ultimately benefits both the taxpayer and the tax authorities.