Overview
The Bhilwara Tax Bar Association has filed a petition before the Rajasthan High Court seeking an extension of the income tax audit deadline for Assessment Year 2025–26. At the same time, the Nagpur Chamber of Commerce has written to the Finance Ministry requesting similar relief.
Their arguments highlight recurring ITR portal glitches, inaccuracies in the Annual Information Statement (AIS), and the added burden of ICAI’s enhanced reporting requirements.
This article explains:
- Who really needs a tax audit under Section 44AB
- Why taxpayers using ITR 3 and ITR 4 are often confused
- The major issues faced in 2025
- Why trade associations and CAs are asking for more time
Background: Why the Demand for Extension?
In India, the due date for filing tax audit reports is usually September 30 of the relevant assessment year. For FY 2024–25 (AY 2025–26), this deadline is fast approaching.
The Bhilwara Tax Bar Association recently moved the Rajasthan High Court, highlighting that persistent technical problems in the e-filing system are causing delays. Similarly, the Nagpur Chamber of Commerce has appealed to the Finance Ministry, citing systemic errors and frequent changes in reporting formats as major roadblocks.
Quoting a senior member of the Nagpur Chamber:
“With continuous changes in reporting and unreliable portal functioning, small businesses and professionals simply cannot meet the September deadline without risking errors.”
Who Really Needs a Tax Audit?
One of the biggest areas of confusion among taxpayers is who exactly is required to get a tax audit. Many individuals assume that filing ITR 3 or ITR 4 automatically means they need an audit, which is incorrect.
A tax audit is governed by Section 44AB of the Income Tax Act and applies only under specific conditions.
Mandatory Tax Audit Thresholds
- Businesses: Turnover above ₹1 crore. However, if cash receipts and payments are less than 5% of turnover, the limit increases to ₹10 crore.
- Professionals: Gross receipts exceeding ₹50 lakh in a financial year.
- Presumptive Taxation (Sections 44AD, 44ADA, 44AE): Audit is required if income is declared below the prescribed profit percentage and total income exceeds the basic exemption limit.
As Jaipur-based Chartered Accountant Ramesh Gupta explains:
“Merely filing ITR 3 does not make audit compulsory. Audit depends on turnover, professional receipts, and whether presumptive taxation is used correctly.”
Key Issues in Income Tax Audit Deadline Extension 2025
1. ITR Portal Glitches
The income tax e-filing portal has been unstable for months. Users report frequent downtimes, delayed acknowledgment receipts, and repeated failures while uploading Form 3CD.
According to industry estimates, over 30% of audit uploads failed at least once during August 2025, forcing professionals to redo submissions.
2. Errors in AIS/TIS Data
The Annual Information Statement (AIS) and Taxpayer Information Summary (TIS), which auto-populate financial data, often contain mismatches. Cases include:
- Duplicate stock market transactions
- Wrong interest entries from banks
- Incorrect credit card spends tagged as taxable income
Reconciling these errors requires additional effort and sometimes client clarification, slowing down the audit process.
3. ICAI’s Enhanced Reporting
In July 2025, the ICAI introduced new disclosures in Form 3CD. These include:
- Reconciliation between GST turnover and book turnover
- CSR (Corporate Social Responsibility) expenditure details
- Detailed reporting of capital expenditure vs. revenue expenditure
While these changes aim to improve transparency, they have significantly increased the workload of CAs and their teams.
Implications for Businesses and Professionals
The added compliance requirements have hit small and medium enterprises (SMEs) the hardest. Many SMEs rely on small accounting teams and cannot adapt quickly to new reporting demands.
If an audit is not completed on time, taxpayers risk penalties under Section 271B:
- 0.5% of turnover or receipts
- Maximum penalty: ₹1,50,000
Additionally, delayed or erroneous filings can trigger scrutiny notices from the Income Tax Department, creating further legal and financial stress.
“The government must recognize the compliance fatigue businesses are facing. Without an extension, penalties will unfairly burden honest taxpayers,” says CA Sunita Mehta from Bhilwara.
Frequently Asked Questions (FAQ)
Q1: What is the current tax audit deadline in India?
The statutory deadline for AY 2025–26 is September 30, 2025. Trade associations are requesting an extension.
Q2: Do all ITR 3 and ITR 4 filers need an audit?
No. Audit is mandatory only if turnover/professional receipts exceed the specified limits or presumptive taxation is not followed properly.
Q3: What are the penalties for not conducting an audit?
Penalties under Section 271B can be 0.5% of turnover, up to ₹1.5 lakh.
Q4: Why are associations like Bhilwara Tax Bar and Nagpur Chamber asking for extensions?
They cite ITR portal glitches, AIS/TIS mismatches, and ICAI’s new reporting requirements as reasons why timely compliance is difficult.
Q5: What should taxpayers do while waiting for an official extension announcement?
Experts recommend starting the audit process early, keeping all reconciliations ready, and consulting CAs regularly to avoid last-minute surprises.
Conclusion
The debate around the income tax audit deadline reflects the growing gap between digital compliance expectations and the practical challenges faced by taxpayers.
The Bhilwara Tax Bar Association’s petition in the Rajasthan High Court and the Nagpur Chamber of Commerce’s representation to the Finance Ministry have intensified calls for relief. Whether the CBDT grants an extension will depend on balancing compliance discipline with realistic timelines.
For now, taxpayers should:
- Begin audit work immediately
- Reconcile AIS/TIS data early
- Prepare Form 3CD disclosures carefully
- Seek professional advice to avoid penalties
As India’s tax system becomes increasingly data-driven, ensuring stability of digital infrastructure will be key to smooth compliance.