Sept 30 tax audit deadline: Why freelancers, professionals and small businesses can’t ignore Section 44AB

Tax Audit Deadline September 30, 2025

Think of a tax audit as a financial vibe check. Just like a company’s accounts are verified, income-tax authorities asks certain businesses and professionals to get their books audited by chartered accountants (CAs), who file a detailed report with the department.

So who are the people required to undergo a tax audit under Section 44AB of the I-T act?

If your business turnover is above Rs 1 crore, you are in. But thanks to digital payments, the limit is stretched to Rs 10 crore, provided at least 95 percent of the transactions are digital. This is the government’s way of pushing people towards cashless transactions.

If you’re a freelancer or a professional like doctors, lawyers, architects, or even CAs with private practices and your annual income exceeds Rs 50 lakh, you need a tax audit too.

Even people under the presumptive taxation schemes like 44ADA aren’t completely free. If they declare profits lower than the prescribed rate, a tax audit is mandatory.

"Persons engaged only in specified profession can opt for presumptive scheme of taxation under section 44ADA where 50% of the gross receipts are deemed to be your income, provided your gross receipts do not exceed Rs 50 lakh,” said Balwant Jain, a Mumbai-based chartered accountant.

Higher threshold of Rs 75 lakh is applicable in case the cash component of the receipts does not exceed 5 percent. "In case you claim that your actual income is lower than 50 percent, you are required to obtain maintain books of accounts and get your account audited," Jain said.

The specified professionals include doctors, lawyers, CAs, company secretaries, cost and management accountants, engineers, architects and persons engaged in various capacity in the film industry.

All this has to be wrapped up by September 30. Miss it, and you could face penalties of 0.5 percent of your turnover or Rs 1.5 lakh, whichever is lower. However, if you have a valid reason for missing the deadline, the department may waive it off.

Many people slip up here. They assume only companies need tax audits but even individuals do. They ignore the digital transaction rule and assume the Rs 10 crore limit always applies. If your earnings are high, a CA is not just nice to have, it’s a must-have.