The Central Board of Direct Taxes (CBDT) has extended the deadline for filing tax audit reports for FY24-25 to October 31, 2025, providing taxpayers and professionals breathing space as they race to meet compliance obligations.
Tax experts, however, caution that missing audit deadlines can trigger a chain reaction of financial consequences – from penalties and interest to blocked loan approvals and missed investment opportunities.
An tax expert said non-compliance with statutory audit requirements under Section 44AB and related forms such as Form 3CD, Form 10B and Form 10BB for charitable trusts, can carry serious financial implications.
“Delay in filing such tax audits unfairly exposes taxpayers to penalties, interest liabilities and, in certain cases, denial of carry-forward of losses and tax deductions despite no fault on their part,” he said. “For charitable trusts, delays can even lead to denial of tax exemption, forcing taxpayers to contest the matter before appellate forums – a costly and time-consuming process.”
Missing the deadline can attract a penalty of 0.5% of turnover or receipts, or ₹1.5 lakh – whichever is lower – subject to the tax officer’s discretion.
The financial impact goes beyond penalties. According to another tax expert, a delayed audit report can result in income tax returns being flagged as defective or treated as non-compliant.
This can affect loan approvals since banks often require audited statements as income proof, delay refund processing, and prevent the carry forward of losses. It will directly impact liquidity and cash flow management for affected professionals and businesses. He said that delayed audits can also heighten the risk of departmental scrutiny, resulting in prolonged disputes and compliance uncertainty.
Apart from penalties, loan denial, delayed refunds etc, late tax audit can also negatively affect a taxpayer’s future wealth-building opportunities.
“An overdue audit may suspend a potential loan, impacting working capital for businesses or personal funds for a home loan. The capital that could otherwise have gone into mutual funds, equities, or fixed deposits is instead locked up in additional tax liabilities and penalties,” another tax expert, said. He warned that prolonged non-compliance could even hurt credibility with investors and business partners.
While the CBDT extension offers temporary relief and allows more time for accurate reporting, experts agree that timely audits are critical to avoid penalties.
