Yes, there is a penalty for not filing a tax audit report for law firm.
According to Section 271B of the Income Tax Act, 1961, a law firm that required to get its accounts audited but fails to do so is liable to a penalty of:
- 0.5% of the total sales, turnover, or gross receipts, whichever is lower, or
- Rs. 1,50,000, whichever is lower.
- The penalty imposed even if the law firm has no taxable income.
The law firm can requir to get its accounts audit if its turnover exceeds Rs. 1 crore in any of the three preceding years.
The audit must conducted by a chartered accountant who is register with the Institute of Chartered Accountants of India.
The audit report must be filed with the Income Tax Department within six months of the end of the financial year.
If the law firm fails to file the tax audit reports by the due date, it will be liable to pay a penalty of Rs. 25,000 for each month of delay, up to a maximum of Rs. 1 lakh.
The law firm can avoid the penalty by filing the tax audit report on time. If the law firm has a genuine reason for not filing the tax audit report on time, it can apply for a waiver of it.
Here are some of the reasons that may be consider as a genuine reason for not filing the tax audit report on time:
- Death of a partner or director of the law firm.
- Natural calamities such as floods, earthquakes, or fires.
- Labour problems such as strikes or lockouts.
- Loss of account books or other records.
If the law firm is able to establish that it had a genuine reason for not filing the tax audit reports on time, it may be waive.
For further details access our website: https://vibrantfinserv.com
To visit: https://www.mca.gov.in/
