If you’re a taxpayer, it’s crucial to be aware that the deadline for some taxpayers has already passed.
The deadline for submitting the Income Tax Audit Report ended on September 30th.
For those who were required to submit this report but missed the deadline, there’s still a chance, but it comes with late fees. Find out who needs an audit and the penalties involved.
Who Needs a Tax Audit?
According to Section 44AB of the Income Tax Act, if your business has an annual turnover exceeding Rs 1 crore, you must undergo a tax audit.
However, if you’ve opted for the presumptive taxation scheme under Section 44AD and your turnover is less than Rs 2 crore, a tax audit is not mandatory.
Professional service providers with an annual gross receipt exceeding Rs 50 lakh are still required to undergo a tax audit.
Required Documents for Tax Audit
To undergo a tax audit, you need specific documents. These include a cash book to track all cash receipts and payments, a journal book based on the mercantile accounting system, a ledger book for debit-credit entries, and carbon copies of all bills. It’s essential to maintain records of all financial transactions.
Consequences of Missing the Tax Audit Deadline
When it comes to tax audits, two deadlines are crucial. The first is the audit report, which must be completed by September 30th.
The second is the Income Tax Return (ITR) filing deadline on October 31st, applicable to those undergoing a tax audit.
Failure to meet the tax audit deadline results in a defective ITR, triggering an automatic notice under section 139 (9). Missing the tax audit deadline incurs a penalty.
Penalty Amount
Under the Income Tax Act, late submission of the audit report can lead to a penalty of up to 0.5 percent of your total sales, turnover, or gross receipts, with a maximum fine of Rs 1.5 lakh.
In other words, if 0.5 percent of your sales exceeds Rs 1.5 lakh, you’ll be fined Rs 1.5 lakh; otherwise, the penalty will be lower
