Income tax audit deadline extension: From eligibility, deadline to penalty — 5 points you need to know

The Income Tax Department recently extended the deadline for submitting income tax audits to October 31, 2025, from the original due date of September 30, 2025. This extension came after requests from various professional associations, including chartered accountant bodies, who cited difficulties faced by taxpayers and practitioners in completing audit reports on time.

With the revised deadline now in place, here's all you need to know about income tax audit —

What is a tax audit?

A tax audit is a review of a business or professional's financial records to confirm compliance with the Income Tax Act. It involves thoroughly checking that income, expenses, and deductions are accurately reported and that tax calculations are correct. The audit focuses on income tax compliance and is mandatory for specific taxpayers based on their income or turnover.

Who is eligible for an income tax audit?

A taxpayer is required to undergo a tax audit if their business turnover or gross receipts surpass ₹1 crore in a financial year, or ₹10 crore when cash transactions are less than 5% of the total transactions, meaning cash receipts or payments do not exceed 5% total.

Professionals must get their accounts audited if their gross receipts surpass ₹50 lakh annually. Additionally, a taxpayer might need to conduct an audit under other particular conditions.

What documents are audited?

Income-tax audit requires the CA to audit account documents such as the cash book, ledger, bank statements, stock records, and sales/purchase invoices, which authenticate the state of affairs of the business as on the last date of the financial year.

When was tax audit deadline extended?

In a statement released on September 25, the Income Tax Department wrote, “The Central Board of Direct Taxes (CBDT) has decided to extend the specified date for filing various audit reports for the Previous Year 2024–25 (Assessment Year 2025–26), from 30th September 2025 to 31st October 2025, for assessees referred to in clause (a) of Explanation 2 to sub-section (1) of section 139 of the Act.”

What is the consequence of missing tax audit deadline?

Failing to file a tax audit report as mandated by Section 44AB can lead to a penalty under Section 271B of the Income Tax Act. The penalty amounts to 0.5% of the total sales, turnover, or gross receipts, capped at ₹1,50,000. However, Section 271B states that no penalty will be imposed if it is shown that there was reasonable cause for the non-compliance, as per the Central Board of Direct Taxes.

Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Taxpayers are advised to consult a qualified tax professional or refer to the official website of the Income Tax Department for accurate and up-to-date guidance before filing their returns.