Tax audit deadline extended to October 21: Should you file now or wait? What taxpayers need to know

The income tax department has extended the deadline for taxpayers required to get their accounts audited to October 21, giving businesses and professionals additional time to complete their tax audit compliance. The deadline extension comes after tax professionals faced a compressed compliance window, along with glitches and changes in tax-filing utilities, portal-related issues and difficulties with UDIN generation.

The extension gives taxpayers more time to review their tax audit reports and income-tax returns before filing. However, experts say taxpayers whose books are finalised and whose tax audit report and ITR are ready should generally not wait until the new deadline. The additional time is better used as a buffer to identify and correct discrepancies.

Should you file the tax audit report now or wait until October?

If the books are finalised and both the tax audit report (TAR) and income-tax return (ITR) are ready, there is little reason to wait, said Deepesh Chheda, partner at Dhruva Advisors.

“Generally, if the books are finalised and both the tax audit report (TAR) and income-tax return (ITR) are ready, there is little reason to wait,” Chheda said. Filing early reduces the risk of last-minute technical issues and, where a refund is due, can also help in earlier processing.

CA Chandni Anandan, tax expert at ClearTax, also advised taxpayers to file as soon as they are ready. There is no general advantage in waiting, she said, while a last-minute rush can result in avoidable errors and omissions.

There can, however, be a specific situation where waiting may make practical sense.

Under Section 43B of the Income-tax Act, certain expenses such as bonus and leave encashment are deductible only if they are actually paid on or before the due date for filing the ITR. Chheda said companies may, for instance, pay their annual or Diwali bonus in the first week of October.

If the tax audit report is filed before such a payment is made, the amount may have to be reported as unpaid. Once the payment is made, the taxpayer may need to revise the audit report before filing the ITR. In such cases, it may be more efficient to make the payment first and then file the TAR, provided the applicable timelines are met.

Taxpayers should nevertheless avoid delaying filing without a specific reason. Where there is a shortfall in advance tax, interest under Section 234B continues at 1% per month until the return is filed.

The ITR deadline for taxpayers subject to tax audit has also been extended to November 21, giving taxpayers additional time for the subsequent return filing.

Use the extended deadline to check these key tax details

The additional time should primarily be used to reconcile the tax audit report and ITR, experts said.

“The most important check is that the income tax return matches the tax audit report,” Anandan said. Taxpayers should ensure that the disallowances and disclosures in the audit report are correctly reflected in the ITR. Any mismatch between the two can lead to questions from the tax department and additional compliance work.

Chheda recommended a final review of additions to fixed assets reported in Clause 18, payments covered under Section 43B reported in Clause 26, and TDS and TCS details reported in Clause 34.

Taxpayers should also reconcile turnover and other key figures with their GST returns. Checking the figures across the books of account, TAR, ITR, GST returns and TDS records can help identify inconsistencies before filing.

A detailed review at this stage can reduce the risk of notices and avoid the need to subsequently revise the tax audit report or ITR.

Why October 21 should not become your filing target

The extended deadline should not be treated as the new target date for filing, experts said.

Chheda advised taxpayers to begin their review early and aim to complete the filing by October 15. This would leave a reasonable buffer to address technical problems, validation errors or other issues that may arise closer to the deadline.

Waiting until the final few days can also create operational difficulties if taxpayers discover discrepancies that require changes to the audit report or supporting records. Portal congestion and technical issues could further complicate last-minute filing.

For taxpayers whose audit report and ITR are already complete and reconciled, filing now can eliminate these risks. Those who still have genuine discrepancies or pending compliance requirements can use the additional period to resolve them.

The extension should therefore be viewed as additional breathing room to improve the accuracy of tax filings, rather than as a reason to postpone a return that is already ready for submission.