In a significant relief for taxpayers and chartered accountants, the Karnataka High Court has extended the deadline for filing tax audit reports (TARs) to October 31. The decision was made in response to a petition filed by the Karnataka State Chartered Accountants Association (KSCAA), making Karnataka the second state after Rajasthan to receive such an extension.

The High Court has directed the Central Board of Direct Taxes (CBDT) to extend the due date for submitting tax audit reports under Section 44AB of the Income Tax Act, 1961. This ruling, however, currently applies only to the states of Karnataka and Rajasthan. A nationwide extension is still pending an official notification from the CBDT. THINK STRAIGHT: Change Your Thoughts, Change Your Life Paperback – 26 October 2020

The writ petition by the KSCAA cited the technical difficulties and challenges faced by tax professionals and auditors. A divisional bench comprising Justice Pushpendra Singh Bhati and Justice Bipin Gupta took these issues into consideration before issuing the order. Similar requests have been filed in courts across other states as well. The court also noted that in previous years, the CBDT had granted similar relaxations.

Who is Required to Undergo a Tax Audit?

Section 44AB mandates a tax audit for:

• Businesses with an annual turnover exceeding ₹1 crore.

• Professionals such as doctors, lawyers, architects, and chartered accountants with an annual income exceeding ₹50 lakh.

Penalty for Late Submission -

Failure to submit the tax audit report by the extended deadline can result in a penalty of 0.5% of the total turnover or ₹1.5 lakh, whichever is lower. Also Read: MP Tejasvi Surya: S.L. Bhyrappa Was a Guiding Light for My Leadership Aspirations