Latest Updates on Tax Audits, Especially under Section 44AB, and related compliance/deadline issues

by

Introduction

Tax audit under section 44AB of the Income-tax Act, 1961 is a critical compliance requirement for businesses and professionals crossing prescribed turnover or gross receipt limits. Every year, the Central Board of Direct Taxes (CBDT) notifies due dates and reporting formats, while the Institute of Chartered Accountants of India (ICAI) issues guidance notes to assist in reporting under Form 3CA/3CB and Form 3CD. For Assessment Year 2025-26, several updates have been issued, including amendments to Form 3CD, release of revised ICAI guidance notes, and industry representations seeking extensions of the statutory deadline due to delayed utility releases and portal glitches. While non-audit return due dates have been extended, no official relief has yet been granted for audit cases, making timely preparation and submission crucial.

Key recent changes & developments

  1. Updated Guidance Note by ICAI under Section 44AB
    ICAI has released the 2025 version of its Guidance Note on Tax Audit under Section 44AB, which incorporates amendments from the Finance (No. 2) Act, 2024, and Finance Act, 2025.This guidance includes updates to reporting requirements, revised clauses in Form 3CA/3CB & Form 3CD, illustrations etc.
  2. Amendments to Form 3CD, effective April 1, 2025
    Through CBDT’s Notification No. 23/2025 (Income-tax (Eighth Amendment) Rules, 2025), Form 3CD was amended. Changes include enhanced disclosures, new clauses, etc.
  3. Limiting number of tax audits per CA from April 1, 2026
    The ICAI has notified that, starting FY 2026-27 (i.e. audits after 1 April 2026), each Chartered Accountant (partner/member) will be limited to 60 tax audit reports per financial year (aggregate across individual capacity + as partner in firms). Audits under some sections (44AE, 44ADA, 44AD) are exempted from this cap.
  4. Deadlines, delays & requests for extensions
    • The deadline for non-audit taxpayers to file ITR for AY 2025-26 was extended to 15 September 2025.
    • ICAI has formally requested the CBDT to extend the due date(s) for audit cases, because of issues like delayed release of audit/ITR utilities/forms, portal glitches, etc.
    • The Nagpur Chamber of Commerce, among others, has also asked for a two-month extension for audit assessees, citing similar issues.
  5. Portal issues & working period compressed
    There are multiple reports and representations (from ICAI and others) that the effective working period for doing audits has reduced (due to non-audit ITR deadline extension, delay in utilities, etc.). Also, there are technical glitches on the Income-Tax portal affecting uploads, validation etc.

What this means for you, if you fall under audit obligations (Section 44AB)

  • Unless your case is one of the non-audit ones, you should assume the existing due date for tax audit report / ITR filing (for audit cases) remains unchanged for now.
  • Because there is no official extension for audits, delaying beyond the current due date could lead to penalties or other consequences.

  • However, keep monitoring official sources (CBDT website, notifications) because one of the requests is quite strong and there is ongoing discussion. If that gets approved, there might be a last-minute extension.

Please share

Leave a comment