Arjuna: Krishna, turnover of many Taxpayers has increased significantly this year due to the growth in e-commerce and digital payments. With September here, I am aware that the deadline is approaching, but could you tell me exactly when is the last date to file the Income Tax Audit Report?
Krishna: Arjuna, the last date to file the Tax Audit Report is 30th September of the assessment year. It is crucial to adhere to this deadline to avoid any penalties.
Arjuna: Krishna, can you explain who is required to file a Tax Audit Report?
Krishna: Arjuna, with Taxpayers business growing, it’s important to understand the criteria for when a Tax Audit Report is applicable:
1. For Business Entities (Cumulative Conditions):
- If your total sales, turnover, or gross receipts exceed Rs 1 crore in a financial year, you must get your accounts audited and file a Tax Audit Report but if your total sales, turnover, or gross receipts do not exceed ₹10 crores and the aggregate of all cash receipts and payments during the financial year does not exceed 5% of the total receipts and payments, you may be exempt from the Tax Audit requirement under certain conditions.
- If you are opting for the presumptive taxation scheme under Section 44AD, this threshold increases to Rs 2 crore.
Example: If a taxpayer is having Turnover of Rs 1.5 Crore and he opts presumptive taxation scheme under Section 44AD then turnover limit for Tax Audit increases to 2 Crores and in this case he is not required to File Tax Audit Report.
2. For Businesses Opting for Presumptive Taxation (Section 44AD):
If you declare income lower than the prescribed percentage under presumptive taxation schemes or if you opted for presumptive taxation but now opt out, and your income exceeds the basic exemption limit, you must file a Tax Audit Report.
3. For Professionals:
If your gross receipts exceed Rs 50 lakh in a financial year, you are required to undergo a tax audit and file a Tax Audit Report.
Arjuna: Krishna, what if someone doesn’t file the Tax Audit Report on time?
Krishna: Arjuna, if a taxpayer who is required to file a Tax Audit Report fails to do so, a penalty under Section 271B of the Income Tax Act can be imposed. The penalty is generally 0.5% of the turnover, gross receipts, or sales, subject to a maximum of Rs. 1.5 lakh. However, if there is a reasonable cause for the failure, the penalty may be waived.
Arjuna: Krishna, who can conduct Income Tax Audit?
Krishna: The tax audit must be conducted by a Chartered Accountant (CA). The CA will review your books of accounts, ensure compliance with tax laws, and file the Tax Audit Report in Form 3CA/3CB along with the required particulars in Form 3CD. The report must be submitted electronically by the due date, typically 30th September of the assessment year.
Arjuna: Krishna, what should taxpayers learn from all this?
Krishna: Arjuna, the key takeaway for taxpayers is the importance of timely and accurate compliance. Filing the Tax Audit Report on time is not just a legal requirement but a crucial step in maintaining the financial integrity of your business. It helps avoid penalties, builds trust with stakeholders, and ensures that your business operates smoothly within the legal framework. Engaging a qualified Chartered Accountant to conduct the audit ensures that all requirements are met accurately, allowing you to focus on growing your business without the worry of tax-related complications.
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