Sept 30: TAR Filing Due Date for FY25, Here Are Some FAQs Taxpayers Generally Have in Their Minds
Many times, taxpayers fall under the category of getting their accounts audited with the Income Tax Department under Section 44AB; in such cases, they are required to file a Tax Audit Report (TAR) electronically at the Income Tax Portal. Such types of taxpayers generally have some general questions in their minds. Here we have answered some frequently asked questions (FAQs) relating to TAR filing:
Question 1: What is a tax audit?
Answer: The dictionary meaning of the word ‘audit’ is to check, inspect, review, etc. There are various types of audits, and they vary as per the types of laws, such as a company audit being required for company law, a cost audit being required for cost accounting law, etc. Under the Income Tax Law, taxpayers are required to get their accounts of his/her business/profession audited.
Section 44AB mentions rules for the taxpayers who are required to get their accounts audited by a chartered accountant (CA). The audit under this section aims to discover the compliance of various provisions of the Income-tax Law and the fulfilment of other requirements of the Income-tax Law.
When accounts of such taxpayers are audited by a chartered accountant seeking the requirements of Section 44AB, it is called a tax audit. In such a case, the chartered accountant performing the tax audit is required to give an audit report including his findings, observations, etc. This report is needed to be given by CA in Form Nos. 3CA/3CB and 3CD.
Question 2: As per section 44AB, who is compulsorily required to get their accounts audited, i.e., who is covered by the tax audit?
Answer: Taxpayers falling under the following categories are required to get their accounts audited:
- A person carrying on business, if his total sales, turnover, or gross receipts (as the case may be) in business for the year exceed Rs. 1 crore. This provision is not applicable to the person who opts for the presumptive taxation scheme under section 44AD and whose total sales or turnover doesn’t exceed Rs. 2 crores.
- A person carrying on a profession, if his gross receipts in the profession for the year exceed Rs. 50 lakhs.
- An assessee who declares profit for any previous year in accordance with section 44AD and decreases profit for any one of the 5 assessment years relevant to the previous year succeeding such previous year, lower than the profit computed as per section 44AD, and his income exceeds the amount that is not chargeable to tax.
- If an eligible assessee opts out of the presumptive taxation scheme within the aforesaid period, he cannot choose to revert to the presumptive taxation scheme for a period of five assessment years thereafter.
- A person who is eligible to opt for the presumptive taxation scheme of section 44ADA.
- This provision does not apply to the person who opts for the presumptive taxation scheme under section 44AD/section 44ADA.
- A person who is eligible to opt for the presumptive taxation scheme of section 44AE.
- A person who is eligible to opt for the taxation scheme prescribed under section 44BB.
Question 3: What is the due date by which a taxpayer should get their accounts audited?
Answer: Taxpayers who fall under the provisions of Section 44AB are required to get their accounts audited and should obtain the tax audit report from their CAs by September 30 for the respective financial year (this due date for the financial year 2024-25 is September 30, 2025). Chartered Accountants (CAs) electronically file this tax audit report (TAR) to the Income Tax Department. After the submission of TAR by CAs, the taxpayer is required to approve this report from his/her registered e-filing account with the Income Tax Department at https://www.incometax.gov.in/iec/foportal.
Question 4: What is the penalty for not getting the accounts audited as required by section 44AB?
Answer: If by any chance, a taxpayer misses filing his/her tax audit report (TAR) by the due date, i.e., September 30, under Section 271B, and hence fails to get their accounts audited and furnish the Income Tax Department for the respective financial year, in that case the Assessing Officer (AO) of the Income Tax Department may impose up to Rs. 150,000. The penalty shall be the lower of the following amounts:
- 0.5% of the total sales, turnover, or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such year or years.
- Rs. 150,000. However, according to section 271B, no penalty shall be imposed if reasonable cause for such failure is proved.
