New Income Tax Bill: Know Major Changes in Tax Audit Applicability [Read Bill]

With the primary goals of lowering compliance obligations, promoting digital transactions, and streamlining audit application for professionals and enterprises, the Income Tax Bill, 2025, brings about major modifications to tax audit rules. Here is a detailed explanation of the main amendments, their effects, and the justification for them.

Under Section 44AB of the Income Tax Act of 1961, the new Income Tax Bill of 2025 is redefining the tax audit requirements.Under section 44AB(a) of the Income Tax Act, 1961, the maximum for businesses was ₹1 crore; however, the current Income Tax Bill suggested raising that amount to ₹5 crore.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

According to the current Act, 1961, the higher turnover limit for tax audit exemption on businesses (where cash transactions are less than 5%) is ₹10 crore; the new bill was intended to raise this to ₹25 crore. Section 44AB(b) of the Act exempts additional enterprises from hiring audit professionals up to ₹50 lakh, while ₹1 crore was initially suggested. For tax audit exemption, the limit quadrupled.

 The new bill will exclude more professionals and businesses from mandatory tax audits, particularly those with a large volume of digital transactions. Businesses that do 95% or more of their transactions online are eligible for a larger audit exemption ceiling, which promotes a cashless economy. lessens the burden of compliance for small and medium-sized businesses.

Impact on Tax Audit by Change in Presumptive Taxation

The presumptive taxation schemes under Section 44AD (for businesses) and 44ADA (for professionals) have been expanded, further reducing the tax audit burden.

• Presumptive Taxation Schemes under Section 44AD (for businesses)

Turnover up to ₹2 crore eligible for presumptive taxation from existing was proposed to Increase to ₹3 crore.  As per the existing law, if the turnover > ₹2 crore, tax audit is mandatory and now with th eproposed new bill, tax audit required only if turnover exceeds ₹3 crore       

• Presumptive Taxation for Professionals (Section 44ADA)

Turnover up to ₹50 lakh eligible for presumptive taxation was increased to ₹1 crore. As per the act, if turnover > ₹50 lakh, tax audit mandatory and now tax audit required only if turnover exceeds ₹1 crore.

Digital Tax Audit Filing & Faceless Processing

The new Income Tax Bill, 2025, refers to the e-verification option as faceless E-assessment & Auto-verification, but the current Income Tax Act mentions the e-filing of Form 3CD in the clause. Under the proposed measure, compliance is at the local AO level, as per the current law. The centralized faceless tax audit system is used to complete the compliance.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

 By reducing human intervention, digital and impersonal tax audit evaluation minimizes harassment. AI-based risk analysis will speed up audit processes and identify high-risk instances for closer examination.  Errors and delays are decreased when tax audit reports are automatically verified.

Changes in Tax Audit Filing Deadlines

According to the current law, the deadlines for filing tax audit reports and ITRs for tax audit cases are September 30 and October 31, respectively. The deadlines were rescheduled to October 31 and November 30, respectively, by the new law. Tax experts are less stressed at the last minute when the deadline for tax audits is extended by one month. ensures easier compliance by coordinating the filing of tax audit reports with the faceless assessment system. allows companies extra time to reconcile their tax returns, books, and finances.

Changes in Penalty for Non-Filing of Tax Audit Reports

Although the penalties for failing to comply with tax audit criteria have not changed significantly, enforcement measures have become more stringent. Misreporting is discouraged by severe penalties for inaccurate tax audit reports.  Penalty notices will be automatically created when AI-based identification of tax audit discrepancies occurs.  To prevent needless scrutiny, businesses must make sure that their tax audit reporting is correct.

Special Provisions for Large Corporations & MNCs

Stricter adherence to international taxation standards and transfer pricing laws will now be part of tax audits for corporations and multinational corporations ( MNCs ). The new measure strengthened the disclosure requirements for transactions with foreign entities. More stringent documentation and arm's length pricing guidelines for multinational corporationsFinancial firms operating in the IFSC are granted unique exemptions under the new bill.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

 The new bill proposed to increase the  monitoring of international companies and multinational corporations to stop tax evasion. For tax audits, Indian businesses with international activities require improved paperwork. Companies in IFSC benefit from loosened tax audit regulations, which enhance India's standing as a financial center.

In addition to improving digital compliance, impersonal assessments, and tougher punishment for misreporting, the Income Tax Bill, 2025, drastically lowers the tax audit load on professionals and enterprises.

To Read the full text of the Tax Bill CLICK HERE

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