New Deadline for Submitting Tax Audit Report Approaching: Penalties Await Non-compliance

The deadline for submitting the income tax audit report is rapidly approaching on October 7, 2024, for the financial year 2023-24 (assessment year 2024-25). This deadline is an extension from the original date of September 30, 2024, and the government is unlikely to extend it further.

“In response to a representation made by the Associated Chamber of Commerce & Industries Udhampur, a request was made to the Hon’ble Finance Minister for an extension for filing the Audit Report for Assessment Year 2024-25. Thank you, Smt. Nirmala Sitharaman ji @nsitharaman, for conceding the request,” tweeted Union Minister Dr. Jitendra Singh.

Consequences of Non-compliance

Failing to submit the tax audit report by October 7, 2024, can result in severe penalties. According to industry experts, the tax audit must be completed by September 30, 2024, and the filing can occur until October 7, 2024. Non-compliance with Section 44AB (tax audit) will incur a penalty of either 0.5% of total sales, turnover, or gross receipts, or ₹1.5 lakh, whichever is less.

Importance of Timely Filing

Taxpayers required to conduct an income tax audit must first upload their audit report and then file their income tax return (ITR). These processes are interconnected, and skipping either is not an option. The original deadline to file ITR, applicable when a tax audit is required, is October 31, 2024.

Consequences of Failing to Upload the Tax Audit Report:

Your ITR will be considered defective if the audit report is not submitted.

Missing the ITR deadline can lead to the requirement to file a belated ITR by December 31, 2024.

Penalties for Late or Non-filing

Late Fees: Under Section 234F, a fee of ₹1,000 is payable (₹5,000 if declared income exceeds ₹5 lakh).

Interest on Outstanding Tax: Tax liabilities may incur interest.

Losses Cannot Be Carried Forward: Taxpayers will lose the ability to carry forward business or capital losses if the ITR is not filed on time.

Penalty: The assessing officer may levy a penalty of ₹5,000 under Section 271F.

Interest on Tax Due: Interest may be charged under Section 234A for outstanding liabilities.

Reassessment Notices: The tax department may issue notices for detailed scrutiny due to non-filing.

Potential Prosecution: In serious cases with significant tax liability, prosecution may be initiated for non-filing.

Taxpayers are urged to prioritize the timely submission of their tax audit reports to avoid penalties and maintain compliance with the Income Tax Act, 1961.

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