gtag('config', 'UA-154374887-1');

Tax Audit Due Date Prescribed and Return Filing Due Date Extended-Budget 2020

tax-audit-due-date-prescribed-and-return-filing-due-date-extended-budget-2020

Finance Bill, 2020 has prescribed Due Date to file a Tax Audit Report. It is proposed that the due date to furnish a tax audit report is one month prior to the due date of filing of return of income. Hence, the due date to file a tax audit report is linked with the ITR filing due date.

Further, the Bill has extended the due date of filing of return of income u/s 139(1) of the Income Tax Act, 1961 to 31st October from 30th September. Hence, the due date of the Tax Audit report filing is 30 September.

Currently, under section 44AB of the Act, every person carrying on business is required to get his accounts audited, if his total sales, turnover or gross receipts, in business exceed or exceeds Rs. 1 crore in any previous year. 

In the case of a person carrying on the profession, he is required to get his accounts audited, if his gross receipt in profession exceeds, Rs. 50 lakh in any previous year.

For this purpose, section 44AB of the Income Tax Act, 1961 is amended vide clause 23 of the Finance Bill, 2020.

Clause 23 of the Bill seeks to amend section 44AB of the Income-tax Act relating to the audit of accounts of certain persons carrying on business or profession and to prescribe the due date of filing the Tax Audit Report.

Amendment of section 44AB.

23. In section 44AB of the Income-tax Act,–

(A) .........

(B) in the Explanation, in clause (ii), after the word “means”, the words “date one month prior to” shall be inserted.

Consequent amendment in section 139(1) is also proposed by Clause 66 of the Finance Bill, 2020 which reads as under-

Amendment of section 139.

66. In section 139 of the Income-tax Act, in sub-section (1), in Explanation 2, in clause (a),–

(a) ......

(b) in the long line, for the figures, letters and words “30th day of September”, the figures, letters and words “31st day of October” shall be substituted.

The due date for filing return of income under section 139(1) is proposed to be amended by providing 31st October of the assessment year (as against 30th September) as the due date for an assessee referred to in clause (a) of Explanation 2 of sub-section (1) of Section 139 of the Act.

Clause (a) of the section 44AB provides that every person carrying on business shall get his accounts of any previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year.

Clause (ii) of the Explanation to section 44AB defines the expression “specified date” as the due date for furnishing the return of income under section 139(1).

It is proposed to amend the said clause so as to provide that the specified date will mean one month prior to the due date for furnishing the return of income under section 139(1).

The rationale of preponing the tax audit report due date is to enable the pre-filling of returns. 

In case of persons having income from business or profession, it is required that the tax audit report may be furnished by the said assessees at least one month prior to the due date of filing of return of income.

This requires amendments in all the sections of the Act which mandates the filing of audit report along with the return of income or by the due date of filing of return of income. 

Thus, provisions of section 10, section 10A, section 12A, section 32AB, section 33AB, section 33ABA, section 35D, section 35E, section 44AB, section 44DA, section 50B, section 80-IA, section 80-IB, section 80JJAA, section 92F, section 115JB, section 115JC and section 115VW of the Act are proposed to be amended accordingly.

These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-2021 and subsequent assessment years.

The present provision related to return filing due date as per Explanation 2(a) is reproduced below-

Explanation 2.—In this sub-section, "due date" means,—
(a)  where the assessee other than an assessee referred to in clause (aa) is—
 (i)  a company; or
 (ii)  a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force; or
(iii)  a working partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force,
the 30th day of September of the assessment year;

which shall be amended from 1st April 2020 as below-

Explanation 2.—In this sub-section, "due date" means,—
(a)  where the assessee other than an assessee referred to in clause (aa) is—
 (i)  a company; or
 (ii)  a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force; or
(iii)  a working partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force,
the 30th day of September 31st day of October of the assessment year;

In respect of the above amendments, the following points are noteworthy-

1. A similar amendment is also carried on in section 92F to provide for a due date of filing of a tax audit report which is required to be obtained under section 92E. Prior to the amendment, the tax audit report was required to be filed on or before the due date specified in section 139(1) which is 30th November.

After the amendment, the due date to furnish the tax audit report is preponed with the return filing due date under section 139(1) and it is provided that the tax audit report shall be furnished one month prior to the due date for furnishing the return of income under section 139(1). The provision is in the same line with section 44AB.

What will be the 'due date' for furnishing the Tax Audit Report in this case? Will it be 30th October or 31st October? So far it appears that it is 30th October and not 31st October.

2. It is for the first time filing of the tax audit report is separated from the return of income. Earlier, the tax audit report was required to be filed along with the return of income.

3. There will be no relief to tax auditors. So far as the auditors are concerned, even before the amendment, they were required to complete the audit task by 30th September. The same will continue in the post amendment regime.

4. Even if the assessee files belated return of income, it must furnish its tax audit report by 30th September or 30th October, as the case may be.

5. The objective of preponing the due date to furnish the tax audit report is stated to enable the prefilling of the return of income. Henceforth, all the disallowances, etc. will be prefilled in the return from the tax audit report itself. Even deductions under section 35, 80G, etc will be prefilled.

6. Section 43B allows a person to claim certain deductions on a payment basis if the same is paid on or before the due date of filing of return of income. 

After furnishing the tax audit report, an assessee will get one more time to file its return of income. Now, if certain payments are made after furnishing the tax audit report in September then there will be a mismatch between the deduction reported in the tax audit report and the deduction claimed in the ITR. A notice of mismatch will sure come.

7. This amendment shall apply from the assessment year 2020-21. It means it will be applicable for the financial year ending on 31st March 2019.

Hence the due date for a company, etc to file its tax audit report under section 44AB  is 30th September 2020 and the due date to file the return of income is 31st October 2020.

When books are finalized, the tax audit report is furnished, most of the part of the ITR will be prefilled, then what's the need for one-month time to file the return.

Remember, this year Diwali is in November but the Durga Puja and Dussehra are towards the end of October. So file the ITR before the festive season gets started.

Get all latest content delivered straight to your inbox
Sociliaze with Us

Post a comment

1 Comments

  1. Please extend Tax Audit due date 31 October, 2020 up to 30 November,
    2020

    ReplyDelete