Consequences of missing the tax audit filing deadline and the possibility of extension for taxpayers

Missing the tax audit filing deadline can result in penalties, increased scrutiny, and delays in refunds. Many taxpayers are concerned about whether authorities might grant an extension. With evolving rules and regular government updates, it's essential to understand the risks and the relief options that could still be accessible.

Anita Basrur, Partner, Sudit K. Parekh & Co. LLP explained, "Tax audit is prescribed by the authorities in respect of certain specified businesses. It is required to ensure compliance with tax laws and regulations. A tax auditor is required to report and comment on various compliance aspects, eg, Tax deductions, TDS filing, GST payments and filings, etc. In addition, reporting of various allowances and disallowances also happens through the tax audit report."

Tax Audit Report provides a summary of the assessee’s business at one go. In summary, tax audits play a crucial role in promoting compliance and maintaining the integrity of the tax system.

CA (Dr.) Suresh Surana says, "Failure to comply with the prescribed tax audit filing deadline under Section 44AB of the Income-tax Act, 1961 (hereinafter referred to as ‘the IT Act’) can have significant implications for taxpayers. The due date for furnishing the tax audit report is generally 30th September (or such other date as notified) of the relevant assessment year."

For Assessment Year (AY) 2025 - 26, the Central Board of Direct Taxes (CBDT) has extended the due date for filing tax audit reports under Section 44AB from September 30, 2025 to October 31, 2025. However, while the audit deadline was extended, the corresponding Income Tax Return (ITR) due date for audited cases initially remained October 31, 2025, thereby removing the usual one-month gap between these two filings.

Penalty under Section 271B: Failure to file the tax audit report within the prescribed time can attract a penalty of 0.5% of turnover/gross receipts or Rs. 1.5 lakh, whichever is lower.

"If the delay occurred due to a reasonable cause, such as technical issues or unavoidable circumstances, the penalty may be waived under Section 273B. Apart from the monetary penalty, non-filing of the audit report can attract scrutiny from the Income Tax Department and indicate non-compliance with statutory obligations, potentially affecting the taxpayer’s credibility in financial and regulatory matters," said Gaurav Jain, Partner, Direct Tax, Forvis Mazars India.

Taxpayers cannot individually request an extension of the tax audit filing deadline under the Income Tax Act. The due date for filing the tax audit report is fixed by law (generally September 30 or October 31 if covered by a transfer-pricing report, depending on the Assessee type) and only the Central Board of Direct Taxes (CBDT) has the authority to extend it through an official notification or circular, usually in cases of widespread issues like technical glitches or natural calamities. 

"Regarding the possibility of extension, several High Courts have intervened to direct extension for filing of the income-tax returns. The Gujarat High Court in the case of Income Tax Bar Association & ANR. v/s Union of India & ORS. r/Special Civil Application no. 13533 of 2025 has directed the CBDT to maintain the statutory one-month gap between the tax audit report and ITR filing deadlines, effectively requiring the ITR due date for audit cases to be extended to November 30, 2025. The Punjab & Haryana High Court in the case of Ashwini Kumar v. Central Board of Direct Taxes and Another CWP-28440-2025 has also given CBDT directions to issue a necessary circular for extending the due date of Income-tax Return," said Surana.

Taxpayers cannot individually request an extension of the tax audit filing deadline under the Income Tax Act. "The due date for filing the tax audit report is fixed by law (generally September 30 or October 31 if covered by a transfer-pricing report, depending on the Assessee type) and only the Central Board of Direct Taxes (CBDT) has the authority to extend it through an official notification or circular usually in cases of widespread issues like technical glitches or natural calamities," adds Jain.

Nevertheless, taxpayers should adhere to the applicable statutory deadlines while monitoring CBDT notifications for any extensions, as non-compliance may result not only in penalties but also in complications in filing and assessment procedures.