Some individuals need to get their accounts audited to ensure compliance with the tax laws. The deadline to submit the tax audit report is September 30.
The deadline to file income tax return for the financial year 2022-23 was July 31. This is not the only document the Income Tax Department requires from many taxpayers. Some also have to submit a tax audit to the authorities. An audit requires a detailed examination of a person or business entity’s accounts. Under Section 44AB of the Income Tax Act, 1961, the measure is undertaken to ensure compliance with the law and to keep fraudulent practices in control.
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Who needs to file a tax audit report?
If the turnover, sales or gross receipts of a business are over Rs 2 crore in a financial year, the owner of the enterprise needs to file an audit report. The provision does not apply to individuals who apply for presumptive taxation scheme under Section 44AD. Businesses whose total sales do not exceed Rs 2 crore are also not considered for mandatory audit.
Apart from the Rs 2 crore threshold, there are certain other individuals or businesses that are subject to audits.
If cash transactions do not go over 5 per cent of the total turnover of the business, the mandatory tax audit threshold limit is Rs 10 crore.
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Professionals with gross receipts of over Rs 50 lakh in an assessment year also need to submit an audit report.
Individuals who are declaring profit according to Section 44AD of the Income Tax Act, but reducing profit for the next 5 financial years to below the computed gains will have to get their account audited if their income is over the non-taxable threshold.
What is the deadline to submit a tax audit?
The account needs to be audited by a chartered accountant only. The deadline to submit a tax audit for the financial year 2022-23 is September 30, 2023. The report needs to be electronically filed by a chartered accountant. After that is completed, the taxpayer has to approve the audit report from their e-filing account at incometax.gov.in/iec/foportal.
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Is the deadline to file ITR different for those who need to be audited?
The ITR filing deadline is October 31 for individuals or businesses whose accounts are subject to a tax audit.
What is the penalty if the taxpayer does not submit the audit as per section 44AB?
If any person whose account was to be audited u/s 44AB fails to comply with the demand and furnish the report, the Assessing Officer may impose a penalty on the taxpayer if no reasonable cause is provided. The penalty will be Rs 1.5 lakh or 0.5 per cent of the total sales, gross receipts or turnover of a business/professional in the time period that was to be audited, whichever is lower.
