Due dates for Income Tax and Audit Returns F.Y 2020-21

Last Updated On: April 10, 2021, 11:42 p.m.
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DUE DATES FOR INCOME TAX AND AUDIT RETURNS FOR F.Y 2020-21

 

Tax audit is the official examination or audit of the tax department to the tax return that declares by taxpayers as required by law. Section 44AB of the Income-tax Act, 1961 contains the provisions for the tax audit of an entity. Under section 44AB, every person who is engaged in business or profession is required to conduct tax audit and gets his books of accounts audited by a practicing Chartered Accountant if during the previous the turnover or gross receipts of the assessee is more than Rs. 1 crore in case of business or Rs. 50 Lakhs in case of profession.

 

Tax audit is conducted to ensure the following:

  • Proper maintenance and correctness of books of accounts and certification of the same by a tax auditor
  • Reporting observations/discrepancies noted by tax auditor after a methodical examination of the books of account
  • To report prescribed information such as tax depreciation, compliance of various provisions of income tax law etc.
  • All these enable tax authorities in verifying the correctness of income tax returns filed by the taxpayer. Calculation and verification of total income, claim for deductions etc. also becomes easier.

 

What are the various tax audit limit as per Income tax act?

Under section 44AB, every person who is engaged in business or profession is required to conduct tax audit and gets his books of accounts audited by a practicing Chartered Accountant if during the previous the turnover or gross receipts of the assessee is more than Rs. 1 crore in case of business or Rs. 50 Lakhs in case of profession.

In case the person is covered under presumptive taxation scheme of Income tax act than the assessee is required to conduct tax audit if the income from business is less than 8% of the total turnover in case of business assessee or less than 50% of the total receipts in case of person carrying professions.

The Finance Act 2020, has made amendment under section 44AD and increased the turnover limit to Rs. 5 crore. In order to qualify for the limit the assesee is required to fulfill 2 conditions as follows:

a. total cash receipts during the previous year is less than 5% of the total receipts, and;

b. total cash payment during the previous year is less than 5% of the total payments.

If a person has opted for presumptive scheme under section 44ADA and he claims his income lower than the deemed profits and his income exceeds the ceiling for chargeability of income tax, is also required to get tax audit done.

 

Amendment made by Finance Act 2021 in Tax audit limit:

Currently, under section 44AB of the Income Tax 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 one crore rupees in any previous year. In case of a person carrying on profession he is required to get his accounts audited, if his gross receipt in profession exceeds, 50 lakh rupees in any previous year.

In order to reduce compliance burden on small and medium enterprises, through Finance Act 2020, the threshold limit for a person carrying on business was increased from one crore rupees to five crore rupees in cases where,-

(i) Aggregate of all receipts in cash during the previous year does not exceed five per cent of such receipt; and

(ii) Aggregate of all payments in cash during the previous year does not exceed five per cent of such payment.

In order to incentivise non-cash transactions to promote digital economy and to further reduce compliance burden of small and medium enterprises, it has been proposed to increase the threshold from five crore rupees to ten crore rupees in cases as above the same shall be applicable from 1st April 2021.

 

The following are the list of persons who are required to get their accounts audited under section 44AB:

Category of person Threshold limit exceeding which tax audit is mandatory
The person carrying on business Total sales / turnover / gross receipts exceed Rs 1 Crore in any previous year.
The person carrying on profession Gross receipts exceed Rs 50 Lakhs in any previous year.
The person carrying on business covered under section 44AE or section 44BB or section 44BBB Income claimed by the person is lower than the deemed profit under respective sections in any previous year.
The person carrying on profession covered under section 44ADA Income claimed by the person is lower than the deemed profit and income exceeds the specified threshold exemption limit in any previous year.
The person carrying on business to whom provisions of section 44AD (4) are applicable Income exceeds the specified threshold exemption limit in any previous year.

 

 

What is the due date of Tax Audit?

The due date of furnishing audit report under section 44AB is on or before 30th September of the Assessment year. Due date for filing Income tax return by person who are liable for tax audit for the assessment year 2021-22 is 30th October 2021. On the other hand due date for person who are not liable for Tax audit are required to furnish there Income tax return on or before 30th July of the Assessment Year. Due date for filing Income tax return by person who are not liable for tax audit for the assessment year 2021-22 is on or before 30th July 2021. Also where an individual is a partner in partnership firm and such firm is liable for Tax audit than the partner is required to furnish his Income tax return on or before 30th October 2021.

The above information can be summarised as below:

Compliance Due date
Furnishing Tax audit report under section 44AB On or before 30th September 2021
Filing of Income tax return of person liable for Tax audit On or before 30th October 2021
Filing of Income tax return of person not liable for Tax audit On or before 30th July 2021
Filing of Income tax return of person who is a partner in a partnership firm and firm is liable for Tax audit On or before 30th October 2021
Filing of Income tax return of person who is a partner in a firm not liable for audit On or before 30th July 2021

 

 

 

 

 

 

 

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