Income tax audit report explained: New deadline, who needs to file, and penalties. Key FAQs answered

Why was the income tax audit deadline extended?

The decision came in response to representations from various professional associations, including Chartered Accountants, who highlighted difficulties faced by taxpayers and tax professionals in completing audit reports on time.

Key FAQs on the income tax audit report

A tax audit report is a review of whether a business or professional has kept appropriate books of accounts and adhered to the provisions of the Income Tax Act. Section 44AB of the Income Tax Act mandates certain taxpayers to get their accounts audited by qualified professionals.

The chartered accountant conducting the tax audit is required to give his findings, observations, etc., in the form of an audit report. The report of tax audit is to be given by the chartered accountant in Form Nos. 3CA/3CB and ​3CD.

• An individual or entity carrying on a business is required to get a tax audit done if the total sales, turnover, or gross receipts exceed ₹1 crore in a financial year.

• Exception: This requirement does not apply if the taxpayer has opted for the presumptive taxation scheme under Section 44AD, and their total turnover or sales is less than ₹2 crore.

• Enhanced Threshold (₹10 crore): The limit of ₹1 crore is increased to ₹10 crore if:

• Cash receipts and cash payments during the year do not exceed 5% of the total receipts and payments, respectively. In other words, at least 95% of the transactions must be conducted through banking or digital channels.

An individual carrying on a profession is required to undergo a tax audit if their gross receipts exceed ₹50 lakhs in a financial year.

A person who has opted for presumptive taxation under Section 44AD, and then declares profits lower than the presumptive rate in any one of the next five years, and has income exceeding the basic exemption limit, is required to get a tax audit done for that financial year.

It is important to note that once a taxpayer opts out of the presumptive scheme, they cannot opt back in for the next five assessment years.

Tax audit does not apply to taxpayers who are eligible under the presumptive taxation schemes (Section 44AD or Section 44ADA), and fully comply with the conditions prescribed under these sections.

The forms to be used for tax audit reports under the Income-tax Act depend on the type of audit requirement

⦁General Tax Audit (under Section 44AB only)

Audit Report: Form 3CB

Statement of Particulars: Form 3CD

This applies to individuals or entities not required to get their accounts audited under any other law, except under the Income-tax Act.

⦁Audit under any other law (e.g., Companies Act)

Audit Report: Form 3CA

Statement of Particulars: Form 3CD

This applies to those who are already required to get their accounts audited under another law, such as the Companies Act. In such cases, the tax auditor refers to that audit and submits the report in Form 3CA, along with the details in Form 3CD.

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

⦁₹ 1,50,000.

However, according to section 271B​, no penalty shall be imposed if reasonable cause for such failure is proved.

The previous deadline for furnishing the income tax audit report under the Income-tax Act, 1961, for the Previous Year 2024–25 (Assessment Year 2025–26), specifically for assessees referred to in clause (a) of Explanation 2 to sub-section (1) of section 139, was 30th September, 2025.