Tax audit deadline September 30: 5 common mistakes in GST turnover, TDS, AIS and business expenses to avoid

Taxpayers subject to tax audit for assessment year (AY) 2026-27 have until 30 September 2026 to furnish their tax audit report in the applicable cases. For FY 2025-26, the audit report continues to be filed under the Income Tax Act, 1961 using Form 3CA-3CD or Form 3CB-3CD, as applicable.

With the deadline approaching, taxpayers should not leave reconciliation and documentation until the last few days. Errors in turnover, tax credits, expenses and disclosures can create complications when the return is subsequently filed.

According to CA Chandni Anandan, Tax Expert at ClearTax, taxpayers should close their books early, reconcile key ledgers and keep invoices, contracts, the trial balance and fixed-asset schedule ready for the auditor well before the deadline.

1. Don’t leave the tax audit report until the last minute

One of the common mistakes is waiting until the final days to complete the audit report. This can result in incomplete Forms 3CA/3CB and 3CD, as well as errors in disclosures.

Taxpayers should give their auditor sufficient time to examine the books and supporting documents. This includes keeping invoices and contracts ready, reconciling important ledgers and sharing a clean trial balance and fixed-asset schedule.

For AY 2026-27, the Income Tax Department says the tax audit report is due on 30 September 2026 in cases where the income-tax return is due on 31 October 2026.

Anandan also flags inaccuracies in clause 44 of Form 3CD as another area taxpayers should watch. The statement of particulars in Form 3CD forms part of the tax-audit reporting requirements.

2. Reconcile GST turnover, books and income-tax figures

Taxpayers should ensure that their turnover or gross receipts reported in the books are properly reconciled with the figures appearing in GST returns, wherever applicable, as well as the income reported in the tax return.

A mismatch does not automatically mean that there is an error, but taxpayers should be able to explain any difference and maintain supporting records.

The same check should be extended to information available in AIS and TIS. The Income Tax Department says AIS contains information beyond TDS and TCS, including specified financial transactions, tax payments and other information, while TIS provides aggregated information at the source level.

Taxpayers should reconcile turnover or gross receipts, interest, dividend and other income shown in AIS/TIS with their books and the figures proposed to be reported in the ITR.

3. Check TDS and TCS credits before filing

Another common problem is a mismatch between the TDS or TCS claimed in the return and the amount appearing in Form 26AS.

Taxpayers should check their TDS/TCS credits against Form 26AS and AIS and verify their PAN, assessment year and the amount reported by the deductor or collector.

Importantly, from AY 2023-24 onwards, Form 26AS primarily displays TDS/TCS-related information, while other transaction information is available through AIS.

If a deductor has reported the amount incorrectly, the taxpayer should ask the deductor to file a correction statement. If the taxpayer has made the error in the return, the appropriate correction or rectification route should be used.

The Income Tax Department’s tax-credit mismatch guidance says taxpayers can check mismatches between the tax credits claimed in the ITR and those reflected in Form 26AS. For a TDS mismatch, the taxpayer should inform the employer or deductor, who can file a revised TDS return.

4. Don’t claim personal expenses as business deductions

For business owners and professionals, another important check is whether expenses claimed in the profit and loss account are genuinely related to the business or profession.

“Claiming personal or non-business expenses as business expenditure can lead to disallowance under Section 37 of the Income Tax Act, 1961,” Anandan said.

Taxpayers should check whether an expense was incurred wholly and exclusively for business or professional purposes and whether it is backed by proper invoices and payment evidence. They should also ensure that the expense is not personal or capital in nature and has been correctly classified in the books.

Personal travel, household expenses, personal insurance and family expenses should not be routed through the business profit and loss account, she said. This is particularly relevant for proprietors and small businesses, where personal and business finances can sometimes get mixed.

5. Check tax payments and other income before signing off

Taxpayers should also reconcile advance tax and self-assessment tax payments with Form 26AS and bank statements. Interest, dividend and other income appearing in AIS or TIS should similarly be checked against the books and the return.

The Income Tax Department itself advises taxpayers to download AIS and Form 26AS and reconcile TDS, TCS and tax paid before filing where there is a discrepancy.

The key takeaway for taxpayers is to treat the September 30 deadline as the final filing date, not the date on which reconciliation should begin. Completing the books, checking tax credits and resolving discrepancies early can leave time for the auditor and taxpayer to correct errors before the report is filed.