Important Changes of Tax Audit for FY 2024-25
Welcome to our blog on Important Changes of Tax Audit for FY 2024-25. This year, the Income Tax Department has introduced important updates in tax audit rules under Section 44AB that every business owner, professional, and taxpayer should know. The key changes include revised turnover limits, stricter reporting in Form 3CD, new norms for presumptive taxation, and an increased focus on digital compliance. Missing these updates may lead to penalties, late filing fees, or disallowance of expenses, so it is crucial to stay aware and prepare in advance. In this blog, we will explain the latest changes in a simple way to help you understand how they impact your tax audit for FY 2024-25.
What is Tax Audit and Why It Matters?
A tax audit is a process where the Income Tax Department checks the books of accounts of a business or professional to make sure everything is accurate and as per the law. It is conducted under Section 44AB of the Income Tax Act, 1961, and applies when the turnover, sales, or gross receipts of a taxpayer cross the prescribed limits. In simple words, it is like a financial health check-up to confirm that the income, expenses, and deductions shown in the tax return are correct.
Tax audits are important because they help maintain transparency and accuracy in financial reporting. When accounts are properly audited, it reduces the chances of errors, false claims, or tax evasion. For businesses, it builds credibility with banks, investors, and government authorities. For the tax department, it ensures proper collection of taxes. Overall, a tax audit not only helps avoid penalties but also keeps your financial records clean and trustworthy.
Applicability of Tax Audit under Section 44AB
A tax audit under Section 44AB of the Income Tax Act is applicable based on the nature of the taxpayer (business or professional) and their income/turnover. The rules are as follows:
Businesses
Tax audit is mandatory if the total sales, turnover, or gross receipts exceed ₹1 crore in a financial year.
However, the turnover limit is increased to ₹10 crores if the taxpayer carries out at least 95% of business transactions digitally (through banking channels, UPI, debit/credit cards, etc.). This relaxation encourages digital payments and reduces cash dealings.
Professionals
A tax audit is required if the gross receipts from profession exceed ₹50 lakhs in a financial year.
This includes professionals like doctors, lawyers, architects, accountants, consultants, and similar categories.
Presumptive Taxation Cases
Taxpayers opting for presumptive taxation under Sections 44AD, 44ADA, or 44AE are generally not required to maintain detailed books of accounts.
However, if such taxpayers declare income lower than the presumptive rate (e.g., less than 8% or 6% under Section 44AD, or less than 50% under Section 44ADA) and their income exceeds the basic exemption limit, then a tax audit becomes mandatory.
Important Amendments in Tax Audit Rules FY 2024-25
For FY 2024-25, the government has introduced several important changes to make tax audits more transparent and streamlined. One major update is the revised turnover thresholds: businesses with mostly digital transactions now have a higher limit of ₹10 crores, while other businesses continue with the standard ₹1 crore limit. Additionally, the reporting requirements under Form 3CD have been enhanced, especially Clause 44 related to GST compliance, meaning businesses must ensure that their GST returns match the details in the audit report.
The government has also emphasized strict timelines for filing tax audit reports, making it essential to submit them before the income tax return due date to avoid penalties. Moreover, there is increased scrutiny on mismatches between ITR, GST returns, and TDS statements, which means any discrepancies can trigger notices or further verification. Overall, these amendments aim to reduce errors, improve transparency, and encourage digital compliance for businesses and professionals.
Tax Audit Due Dates and Filing Timeline for AY 2025-26
For the financial year 2024-25 (Assessment Year 2025-26), it is important for businesses and professionals to follow the due dates carefully to avoid penalties.
Tax Audit Report Filing
The tax audit report in Form 3CA/3CB and 3CD must be filed by 30th September 2025. This report contains detailed information about your accounts, income, expenses, and compliance with tax laws.
Income Tax Return (ITR) Filing
For cases where tax audit is applicable, the Income Tax Return must be filed by 31st October 2025.
Penalties for Late Filing
Late filing of the tax audit report or ITR can attract penalties under Section 271B, which can be up to ₹1,50,000 depending on the delay.
Following these timelines ensures smooth compliance, avoids penalties, and keeps your financial records in order for the year.
Essential Documents Required for Tax Audit
To complete the tax audit smoothly, the following documents are generally required:
Books of accounts (cash book, journal, ledgers, sales & purchase registers).
Financial statements (balance sheet, profit & loss account).
Bank statements, loan statements, and interest certificates.
GST returns, TDS certificates, and Form 26AS.
Details of fixed assets, depreciation schedules, and investment proofs.
Charges and Professional Fees for Tax Audit
The fees for tax audits can vary based on several factors such as the size of your business, complexity of your accounts, and the experience of your Chartered Accountant (CA). On average, you can expect a starting fee of around ₹10,000, but the actual charges may increase depending on the volume of transactions and the work involved.
Role of Chartered Accountant in Ensuring Compliance
A Chartered Accountant (CA) plays a vital role in helping businesses and professionals stay compliant with tax laws. Their key responsibilities include:
Maintaining Accurate Books of Accounts
Ensures all financial records are properly maintained and organized.
Identifying Errors and Tax-Saving Opportunities
Reviews accounts to detect mistakes and suggest legitimate ways to save tax.
Timely Filing of Reports and Returns
Prepares and files tax audit reports, ITRs, and other compliance documents before deadlines to avoid penalties.
Providing Professional Guidance
Offers expert advice on tax planning, compliance strategies, and future financial decisions to keep your business financially healthy.
Conclusion – Stay Updated with Tax Audit Changes for FY 2024-25
The tax audit rules for FY 2024-25 have introduced important changes aimed at promoting transparency, digital compliance, and accurate financial reporting. Businesses and professionals should stay updated with these amendments, maintain proper books of accounts, and ensure all reports are filed within the prescribed deadlines to avoid penalties. Staying proactive helps in smooth operations and reduces the risk of legal or financial issues.
Consulting a qualified Chartered Accountant (CA) can make this process much easier. A CA provides expert guidance, identifies tax-saving opportunities, and ensures your business remains fully compliant. For professional assistance and more information on tax audits, you can visit legaladda.com or contact us at +91 97263 65804
