Tax Audit Report Filing: Turnover Limit, Due Date and Penalty

Tax Audit Report Filing: Turnover Limit, Due Date and Penalty

An income tax audit is carried out to inspect the books of accounts of a business or a profession. As per Section 44AB of the Income Tax Act, 1961, if the turnover of the business or profession is more than the prescribed limit, the assessee is required to get their books of account audited before filing the Income Tax Return (ITR).

The tax audit ensures that the books of accounts are properly maintained and are accurate. It also ensures that the information submitted in the income tax return, such as income details, tax, deductions, etc., is correct. This helps to identify any mismatches in the books of account.

A tax audit plays a key role in improving a company’s reputation, as it shows the company’s transparency and financial reliability. It is also important in governance because it ensures businesses and individuals follow tax laws, prevents tax evasion and promotes transparency. It also builds trust among investors and the public.

Turnover Limit for Income Tax Audit

The turnover limit is different for businesses and professionals.

• Business: For the businesses, a tax audit is mandatory if the turnover or gross receipts of the business are more than Rs 1 crore in a financial year or Rs 10 crore if atleast 95% of your total transactions, including receipts or payments, are carried out in digital modes.
• Professionals: For Professionals, a tax audit is required when the gross receipts are above Rs 50 lakhs in a financial year.

Due Date for Filing Tax Audit Report for AY 2025-26

The last day to file the income tax audit report is September 30, 2025. The tax audit report must be filed by the chartered accountant before the due date. Over the past few days, many Chartered Accountants and professional bodies have submitted representations urging the government to extend the due date for filing ITR.

What If You Miss the TAR Filing Due Date?

If a taxpayer does not file their income tax audit report before the due date, they will be penalised as the lower of the following amounts:

(a) 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in a profession, in such year or years.

(b) Rs. 150,000.

However, if the taxpayer proves the reason for the failure, then the assessing officer will not levy any penalty.