Contents
- Introduction: Tax Audit Extension Relief for AY 2025-26
- Overview of Key Changes and Extensions
- Complete Extension Details and New Deadlines
- Who is Affected by These Extensions
- Timeline of Events and Background
- Updated Compliance Requirements and Forms
- You may also like
- Frequently Asked Questions (FAQs)
- Conclusion
Introduction: Tax Audit Extension Relief for AY 2025-26
In a significant relief for taxpayers and tax professionals, the Central Board of Direct Taxes (CBDT) has officially extended the due date for filing tax audit reports under Section 44AB of the Income Tax Act, 1961, for Assessment Year 2025-26 (Financial Year 2025-25). The deadline has been moved from September 30, 2025, to October 31, 2025.
This extension provides crucial breathing room for businesses and professionals who were struggling to meet compliance deadlines due to various operational challenges, technical issues, and natural calamities affecting different regions of the country.
The decision comes after widespread representations from professional associations, including the Institute of Chartered Accountants of India (ICAI), Bombay Chartered Accountants' Society (BCAS), and various regional chambers of commerce. Additionally, the Rajasthan High Court's intervention through a Public Interest Litigation (PIL) played a crucial role in this extension.
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Even with the extension, start preparing your tax audit reports immediately. The additional month should be used for thorough review and quality compliance, not as an excuse to delay the process.
Overview of Key Changes for Assessment Year 2025-26
The CBDT's extension decision addresses multiple challenges faced by taxpayers and professionals during the current compliance cycle. The extension is specifically targeted at providing relief without compromising the quality of tax audit reporting.
Note: This extension applies only to tax audit reports under Section 44AB. ITR filing deadlines for audit cases remain unchanged at October 31, 2025, for most taxpayers.
Important: Taxpayers with international transactions must still file their ITRs by November 30, 2025, and their transfer pricing audit reports by October 31, 2025.
| Category | Original Due Date | Extended Due Date | ITR Filing Date |
|---|---|---|---|
| Tax Audit Report (44AB) | September 30, 2025 | October 31, 2025 | October 31, 2025 |
| Non-Audit ITR Cases | July 31, 2025 | September 16, 2025 | September 16, 2025 |
| Transfer Pricing Cases | October 31, 2025 | No Change | November 30, 2025 |
According to CBDT data, over 4.02 lakh Tax Audit Reports (TARs) had been filed by September 24, 2025, including 60,000 TARs filed on a single day, demonstrating robust compliance levels despite the challenges faced by professionals.
Complete Extension Details and New Deadlines
The CBDT's decision to extend the tax audit report deadline is based on multiple factors affecting taxpayers' ability to comply with the original September 30, 2025 deadline.
Tax Audit Report Due Dates
- Regular Tax Audit Cases: October 31, 2025 (extended from September 30, 2025)
- Transfer Pricing Audit Reports: October 31, 2025 (no change from original deadline)
- International Transaction Cases: October 31, 2025 for audit reports
ITR Filing Deadlines
While audit report deadlines have been extended, ITR filing dates remain largely unchanged:
- Non-Audit Cases: September 16, 2025 (already extended from original July 31, 2025)
- Audit Cases: October 31, 2025
- International Transaction Cases: November 30, 2025
- Belated Returns: December 31, 2025 (with applicable penalties and interest)
Who is Affected by These Extensions
The tax audit extension under Section 44AB applies to specific categories of taxpayers based on their turnover, gross receipts, and business activities.
Section 44AB Audit Requirements
| Taxpayer Category | Threshold Limit | Audit Requirement |
|---|---|---|
| Business (Regular) | ₹1 crore turnover | Mandatory audit under Section 44AB |
| Business (Low Cash) | ₹10 crore turnover | If cash transactions ≤ 5% of total |
| Profession | ₹50 lakh gross receipts | Mandatory audit under Section 44AB |
| Presumptive Income | Below declared rate | If profit declared < 8%/6% |
Turnover Thresholds and Eligibility
Businesses requiring tax audit:
- Total sales, turnover, or gross receipts exceeding ₹1 crore in FY 2025-25
- Businesses with turnover up to ₹10 crore if cash transactions exceed 5% of total transactions
- Taxpayers who opted for presumptive taxation but declared profits below prescribed rates
Professionals requiring tax audit:
- Gross receipts exceeding ₹50 lakh in FY 2025-25
- Professionals under presumptive taxation declaring income below 50% of gross receipts
- Those who have opted out of presumptive taxation scheme
Professional Categories
Professional services covered under Section 44AB include legal services, medical practice, engineering consultancy, architecture, accountancy, technical consultancy, interior decoration, and other similar professions as defined under section 44AA of the Income Tax Act.
Timeline of Events and Background
The extension didn't happen overnight. Here's the complete timeline of events that led to this relief:
May 27, 2025
CBDT issued Circular No. 06/2025 extending ITR filing deadline for non-audit cases from July 31 to September 15, 2025, due to extensive changes in ITR forms and system readiness requirements.
July-August 2025
Delayed release of critical ITR utilities (ITR-5, ITR-6, ITR-7) and updated Tax Audit Report (TAR) utilities created significant challenges for professionals. Form 3CD was amended through Notification No. 23/2025 dated March 28, 2025, but updated utilities were released only in mid-July with further patches in late July and August.
September 2025
Multiple professional bodies submitted representations citing:
- Operational disruptions due to floods and natural calamities in several states
- Technical challenges with the e-filing portal despite overall system stability
- Reduced effective working days due to festival season (Navratri, Dussehra, Diwali)
- Increased compliance burden due to enhanced reporting requirements
September 24, 2025
Rajasthan High Court, through a division bench comprising Justice (Dr.) Pushpendra Singh Bhati and Justice Bipin Gupta, ordered CBDT to extend the tax audit deadline to October 31, 2025, in response to a PIL filed by the Tax Bar Association, Bhilwara.
September 25, 2025
CBDT officially announced the extension through a press release, acknowledging the representations from tax practitioners and High Court directions.
Current Status: A formal notification confirming this extension is expected to be issued by CBDT shortly.
Updated Compliance Requirements and Forms
With the extended deadline, taxpayers and professionals should focus on ensuring complete compliance with updated reporting requirements.
Key Forms and Reports
- Form 3CA: For businesses already required to audit under other laws
- Form 3CB: For businesses not required to audit under other laws
- Form 3CD: Tax audit report with over 80 clauses covering detailed compliance requirements
- Form 3CE: For non-residents receiving royalties or technical service fees
Enhanced Reporting Requirements for FY 2025-25
The updated Form 3CD for AY 2025-26 includes enhanced disclosure requirements covering:
- Detailed reporting on cash transactions under Section 269ST
- Enhanced disclosure of expenses under Section 40A(3)
- Specific reporting on income from digital assets and cryptocurrencies
- Detailed compliance reporting under various sections (43B, 56(2), etc.)
- GST reconciliation and interplay with income tax provisions
Penalties for Non-Compliance
Despite the extension, taxpayers should be aware of penalty provisions under Section 271B:
- Penalty Amount: Lower of 0.5% of total sales/turnover/gross receipts or ₹1,50,000
- Example: For ₹5 crore turnover, penalty = 0.5% × ₹5 crore = ₹2,50,000, but capped at ₹1,50,000
- Reasonable Cause: Penalties may be waived if taxpayers can prove reasonable cause for delay
Example Calculation:
Business Turnover: ₹3 crore
Penalty for non-audit: 0.5% × ₹3,00,00,000 = ₹1,50,000
Since calculated penalty equals the cap, final penalty = ₹1,50,000
For turnover above ₹30 crore:
Calculated penalty would exceed ₹1,50,000 but is capped at maximum limit.
Frequently Asked Questions (FAQs) on Tax Audit Extension for AY 2025-26
What is the new due date for filing tax audit reports under Section 44AB for AY 2025-26?
The due date has been extended from September 30, 2025, to October 31, 2025. This applies to all taxpayers required to get their accounts audited under Section 44AB of the Income Tax Act, 1961.
Does this extension apply to ITR filing deadlines as well?
No, the extension only applies to tax audit report submission. ITR filing deadlines remain unchanged: October 31, 2025 for audit cases, and November 30, 2025 for international transaction cases. Non-audit ITR deadline was already extended to September 16, 2025.
Who is eligible for this tax audit extension relief?
All taxpayers covered under clause (a) of Explanation 2 to sub-section (1) of section 139 of the Income Tax Act for Previous Year 2025-25, who are required to undergo audit under Section 44AB, are eligible for this extension.
What are the turnover limits that trigger mandatory tax audit under Section 44AB?
Businesses with turnover exceeding ₹1 crore (or ₹10 crore if cash transactions are 5% or less) and professionals with gross receipts exceeding ₹50 lakh must undergo tax audit under Section 44AB.
What was the reason behind this extension by CBDT?
The extension was granted due to multiple factors: representations from professional associations, disruptions caused by natural calamities (floods), delayed release of ITR forms and utilities, technical challenges, and directions from High Courts including Rajasthan High Court's interim order.
What are the penalties for not filing tax audit report on time?
Under Section 271B, penalty is the lower of 0.5% of total sales/turnover/gross receipts or ₹1,50,000. Additionally, certain deductions and carry-forward of losses may be disallowed if audit reports are not filed within the due date.
Can taxpayers still get extension beyond October 31, 2025?
As of now, no further extensions have been announced. Taxpayers should plan to complete their audit reports by the extended deadline of October 31, 2025. Any future extensions would require official notification from CBDT.
What forms need to be filed along with the tax audit report?
Depending on the case, taxpayers need to file Form 3CA (if audit required under other law), Form 3CB (if not required under other law), and Form 3CD (detailed tax audit report). Non-residents may need Form 3CE for specific transactions.
Does this extension apply to transfer pricing audit reports?
The extension applies to tax audit reports under Section 44AB. Transfer pricing audit reports under Section 92E continue to have their original due date of October 31, 2025, with ITR filing deadline of November 30, 2025 for such cases.
What should taxpayers do if they cannot meet even the extended deadline?
Taxpayers should immediately consult with their Chartered Accountants to expedite the audit process. If unable to meet the deadline due to reasonable cause (like natural calamities, serious illness, or technical issues), they should document the reasons for potential penalty relief under reasonable cause provisions.
How does this extension affect businesses under presumptive taxation?
Businesses under presumptive taxation (Section 44AD) who declare profits below the prescribed rate (8% or 6%) are required to get their accounts audited. These businesses also benefit from the extended deadline of October 31, 2025.
What are the key changes in Form 3CD for AY 2025-26?
Form 3CD has been updated with enhanced disclosure requirements including detailed reporting on cash transactions (Section 269ST), expanded coverage of disallowances under Section 40A(3), specific provisions for digital assets, and improved GST-income tax reconciliation requirements.
Will there be any interest charges if audit report is filed by the extended date?
No, if the audit report is filed by the extended deadline of October 31, 2025, no penalties or interest will be charged. However, if ITR filing is delayed beyond October 31, 2025, interest under Section 234A and late filing fees under Section 234F will apply.
How has the Rajasthan High Court order influenced this extension?
The Rajasthan High Court's interim order mandating CBDT to extend the deadline played a significant role. The court found that denying extension would be arbitrary and violate constitutional provisions, especially given CBDT's history of granting similar extensions in previous years.
What steps should taxpayers take immediately after this extension announcement?
Taxpayers should: 1) Immediately coordinate with their CAs to prioritize audit completion, 2) Gather all required documents and books of accounts, 3) Ensure GST returns are filed and reconciled, 4) Review cash transaction compliance under Section 269ST, 5) Plan for ITR filing by October 31, 2025.
Conclusion: Making the Most of Extended Deadline
The CBDT's decision to extend the tax audit report deadline to October 31, 2025, provides much-needed relief to taxpayers and professionals struggling with tight compliance timelines. This extension, granted after considering multiple representations and High Court intervention, reflects the government's commitment to practical and reasonable tax administration.
However, taxpayers should view this extension as an opportunity to ensure comprehensive compliance rather than a license to delay. The additional month should be utilized for thorough review of audit reports, proper documentation, and quality assurance to avoid future complications.
With over 4.02 lakh tax audit reports already filed and robust compliance levels maintained, the extension ensures that remaining taxpayers can complete their obligations without compromising on accuracy and completeness. Professional bodies and taxpayers should work collaboratively to maximize the benefit of this relief while maintaining the integrity of the tax audit process.
Remember, while audit report deadlines have been extended, ITR filing deadlines largely remain unchanged. Plan your compliance calendar accordingly and ensure timely completion of all related requirements to avoid penalties and interest charges.