The Centre has extended the deadline for filing income tax audit reports for FY 2023-24. Initially set for September 30, the new deadline of October 7, 2024, offers a bit more time for businesses and professionals to submit their tax audits. However, experts advise that further extensions are unlikely. This is crucial for taxpayers looking to avoid penalties under the Income Tax Act, 1961.
Why Was the Deadline Extended?
According to Gaurav Gupta, Managing Partner at S G Taxman Solutions, the extension was due to technical issues related to the exemption from using Digital Signatures, particularly for small business owners and professionals, like proprietorship firms. “Systems and processes were facing technical glitches,” Mr. Gupta explained, adding that the government anticipated a surge in audit submissions due to the integration of GST numbers with PAN data.
Consequences of Missing the October 7 Deadline
Failing to meet the October 7 deadline could lead to serious financial penalties. SR Patnaik, Partner and Head of Taxation at Cyril Amarchand Mangaldas, warned that non-compliance with Section 44AB may incur a penalty of 0.5% of total sales, turnover, or gross receipts, or ₹1.5 lakh, whichever is lower.
Taxpayers required to undergo a tax audit must file their income tax audit report before submitting their Income Tax Return (ITR). Missing this step will render the ITR defective. The deadline for filing ITRs subject to a tax audit is October 31, 2024.
Consequences of Missing the ITR Deadline
According to Parveen Kumar, Partner at Dewan PN Chopra & Co., missing the ITR deadline forces taxpayers to file a belated return, which can be submitted only until December 31 of the relevant assessment year. Filing a belated ITR comes with its own set of consequences:
- Late Fee: Under Section 234F, a late fee of ₹1,000 applies (or ₹5,000 if declared income exceeds ₹5 lakh).
- Interest: Interest on outstanding taxes will accrue.
- Losses: Inability to carry forward losses such as business or capital losses to future years.
Serious Repercussions of Not Filing an ITR
Mr. Kumar also pointed out that failing to file an ITR, even if the tax audit report has been submitted, can lead to:
- A penalty of ₹5,000 imposed by the assessing officer under Section 271F.
- Interest charges under Section 234A for any outstanding tax.
- A notice for reassessment under Section 148 for detailed scrutiny of income.
- The inability to carry forward losses.
- In severe cases, prosecution by the Income Tax Department for significant tax liabilities.
Final Call: File Your Income Tax Audit Report Now
With the income tax audit deadline looming on October 7, 2024, it’s vital to ensure compliance. The extended deadline provides a final opportunity for taxpayers to avoid penalties and ensure their tax filings are up to date. Don’t wait until the last minute, as the government is unlikely to extend the deadline further.
