TL;DR
October 2026 is an important compliance month for businesses that have completed their tax audit for FY 2025–26. After the tax-audit report is filed, businesses should review the audit figures, reconcile Form 3CD with the books and ITR, finalize the income-tax computation, pay any remaining tax liability and file the applicable ITR by the prescribed deadline. For AY 2026–27, businesses subject to tax audit generally have an ITR due date of 31 October 2026, while the tax-audit report is generally due by 30 September 2026.
Businesses should also review TDS/TCS records, advance tax, GST reconciliations, carried-forward losses, depreciation, disallowances and outstanding tax demands before finalizing their October compliance.
Introduction
Completing a tax audit does not mean that a business’s income-tax compliance for FY 2025–26 is finished.
The tax audit is an important stage in the compliance process, but businesses still need to ensure that the information reported in the audit report is correctly reflected in the income-tax return. This makes October 2026 particularly important for businesses that are required to file their audited ITR for AY 2026–27.
For FY 2025–26, the applicable return continues to be governed by the Income Tax Act, 1961 because the income relates to the financial year beginning before 1 April 2026. The Income Tax Department has clarified that AY 2026–27 remains under the old Act even though the return is filed after the new Income Tax Act, 2025 has come into force.
Once the tax audit report has been completed, businesses should use October to complete the remaining income-tax compliance carefully rather than simply uploading the ITR based on the audit figures.
What Happens After the Tax Audit?
A typical post-tax-audit process involves:
- Reviewing the final tax-audit report.
- Reconciling Form 3CD with the books.
- Finalizing taxable income.
- Checking tax already paid.
- Calculating the final tax liability or refund.
- Reviewing TDS and TCS credits.
- Checking advance-tax payments.
- Preparing and filing the applicable ITR.
- Verifying the return.
- Preserving supporting records.
The tax audit report and ITR should tell a consistent financial and tax story. Differences between the two should be investigated before filing.
1. Review the Final Tax Audit Report
The first step after the audit is to carefully review the final tax-audit report.
For FY 2025–26, taxpayers subject to tax audit continue to use Form 3CA or Form 3CB along with Form 3CD, depending on the applicable circumstances. The tax-audit report is generally due by 30 September 2026 for cases where the corresponding ITR due date is 31 October 2026.
Businesses should check:
- Name and PAN
- Assessment year
- Nature of business
- Turnover
- Gross receipts
- Depreciation
- Disallowances
- Statutory dues
- TDS/TCS information
- Loans and deposits
- MSME-related information
- Related-party transactions
- GST-related information
- Other Form 3CD disclosures
Any obvious error should be discussed with the tax auditor before the return is finalized.
2. Reconcile Form 3CD With the ITR
One of the most important October compliance checks is ensuring that the information in Form 3CD agrees with the corresponding information reported in the ITR.
The Income Tax Department’s AY 2026–27 validation framework contains checks relating to audit information and requires relevant ITR details to be consistent with the applicable audit particulars.
Businesses should compare:
- Turnover
- Gross receipts
- Profit
- Depreciation
- Taxable income
- Disallowances
- Brought-forward losses
- Depreciation carried forward
- Tax audit details
- TDS/TCS
- Tax payments
A mismatch does not always mean that the return is incorrect, but unexplained differences should not be ignored.
3. Finalize the Taxable Income
The audited profit shown in the financial statements is not necessarily the same as taxable income.
Businesses may need to make tax adjustments for:
- Depreciation
- Disallowable expenses
- Statutory dues
- Employee-related payments
- TDS-related disallowances
- Certain cash transactions
- Expenses subject to specific tax provisions
- Brought-forward losses
- Tax deductions
- Other income-tax adjustments
The final taxable income should be calculated after considering the relevant provisions of the Income Tax Act, 1961 applicable to FY 2025–26.
4. Check the ITR Filing Due Date
For audited businesses, the ITR due date for AY 2026–27 is generally 31 October 2026 in cases where the taxpayer is not subject to transfer-pricing provisions. The tax-audit report generally precedes the return by one month.
Transfer-pricing cases can have a different timeline, with the applicable return due date generally extending to 30 November 2026.
Therefore, businesses should not assume that every audited taxpayer has the same October deadline.
5. Reconcile TDS and TCS Credits
Before filing the ITR, businesses should verify whether all eligible TDS and TCS credits have been correctly reflected.
The reconciliation should cover:
- Form 26AS
- AIS
- TDS certificates
- TDS ledger
- TCS records
- Customer/vendor records
- Tax deducted by customers
- Tax collected from applicable transactions
If tax credit in the books does not match the tax credit available in the income-tax records, the difference should be investigated before filing.
Incorrect TDS or TCS claims can affect the final tax payable or refund.
6. Verify Advance Tax Payments
Businesses should reconcile all advance-tax instalments paid during FY 2025–26.
The reconciliation should include:
- Challan date
- BSR code
- Challan serial number
- Amount paid
- Assessment year
- Tax head
- Total advance tax paid
The advance-tax figures should match the tax records available on the income-tax portal.
If there is an outstanding tax liability after considering advance tax, TDS and TCS, the business should calculate and pay the applicable amount before filing the return.
7. Calculate Any Remaining Self-Assessment Tax
After finalizing taxable income and adjusting available tax credits, the business should determine whether any additional tax remains payable.
This can arise because:
- Actual profit was higher than estimated.
- Additional income was identified during audit.
- Certain expenses were disallowed.
- TDS was lower than expected.
- Advance tax was insufficient.
- Tax deductions were reduced.
- Other taxable income was identified.
Any remaining liability should be properly calculated before submitting the ITR.
8. Check Interest and Other Tax Consequences
Businesses should not calculate only the basic income-tax liability.
Where applicable, they should also review interest arising from:
- Short payment of advance tax
- Deferment of advance tax
- Delay in filing the return
- Other applicable statutory defaults
For AY 2026–27, the relevant provisions continue under the Income Tax Act, 1961.
A tax professional can determine the applicable interest based on the taxpayer’s specific facts.
9. Reconcile GST Turnover With Income-Tax Turnover
GST reconciliation should continue even after the tax audit is completed.
Businesses should compare:
Books of Accounts ↔ GST Returns ↔ Tax Audit Report ↔ ITR
Differences may arise because of:
- Credit notes
- Advances
- Exempt supplies
- Non-GST income
- Timing differences
- Export transactions
- Year-end adjustments
- Other accounting treatments
A business should maintain a reconciliation explaining genuine differences instead of assuming that every difference is an error.
10. Review Tax Audit Disallowances
The tax audit may identify expenses that cannot be fully deducted for income-tax purposes.
Businesses should verify that these adjustments have been correctly incorporated into the final tax computation.
Common areas requiring review include:
- Certain statutory liabilities
- Cash payments
- TDS-related disallowances
- Employee contribution issues
- Related-party payments
- Expenses prohibited by law
- Other specified disallowances
The final ITR should reflect the tax treatment determined during the audit.
11. Verify Depreciation
Depreciation is another area that should be reviewed before filing the ITR.
Businesses should reconcile:
- Fixed asset register
- Additions
- Deletions
- Date of purchase
- Date assets were put to use
- Applicable depreciation rate
- Written-down value
- Depreciation claimed in tax computation
Book depreciation and tax depreciation are not necessarily identical.
Therefore, businesses should use the tax depreciation calculation while preparing the taxable-income computation.
12. Check Brought-Forward Losses
Businesses carrying forward losses should verify their available losses before filing the return.
The review should cover:
- Business losses
- Speculation losses
- Capital losses
- Unabsorbed depreciation
- Previous-year assessments
- Losses already set off
- Remaining carry-forward balance
The figures should be reconciled with previous ITRs and income-tax records.
The Income Tax Department has also clarified that eligible losses carried forward from earlier years under the old Act continue into the new tax framework subject to applicable conditions.
13. Review Tax Deductions and Exemptions
Before filing the return, businesses should verify all deductions and exemptions claimed in the tax computation.
Supporting documents should be available for relevant claims.
The review should cover:
- Eligible deductions
- Capital expenditure claims
- Employee-related deductions
- Donations, where applicable
- Other business-related deductions
- Investment-linked deductions, where applicable
A deduction should not be claimed merely because it appeared in an earlier year’s return.
The eligibility should be checked for the relevant financial year.
14. Verify Related-Party Transactions
Businesses should review transactions with directors, partners, relatives, associated enterprises and other specified persons, wherever applicable.
The review should include:
- Payments
- Loans
- Advances
- Purchases
- Sales
- Interest
- Reimbursements
- Other financial transactions
The accounting records, tax-audit disclosures and tax computation should be consistent.
15. Review MSME Payment Compliance
October is also a good time to review payments to eligible micro and small enterprises.
Businesses should check outstanding vendor balances and payment timelines, particularly where delayed payments can have tax consequences.
The review should consider:
- Vendor classification
- MSME registration information available from suppliers
- Invoice dates
- Due dates
- Payment dates
- Outstanding balances
- Amounts potentially subject to tax disallowance
Proper documentation is important if the business needs to explain the treatment during a future assessment.
16. Reconcile Books With Bank Accounts
Even after completion of the audit, businesses should retain properly reconciled bank records.
A post-audit review can identify:
- Unrecorded bank charges
- Interest income
- Unreconciled receipts
- Unpresented cheques
- Duplicate entries
- Incorrect classifications
- Other unexplained differences
Any material issue discovered after completion of the audit should be evaluated before finalizing the ITR.
17. Check Outstanding Income-Tax Demands
Businesses should check the income-tax portal for outstanding demands relating to previous assessment years.
An old demand can affect the overall tax position and, in certain situations, the release of a refund.
The business should verify:
- Outstanding demand
- Demand year
- Demand amount
- Whether already paid
- Whether rectification is pending
- Whether an appeal is pending
- Whether a response is required
Old demands should not simply be ignored because the current year’s tax audit has been completed.
18. Ensure the ITR Is Correctly Verified
Filing the ITR is not the final step.
The return also needs to be properly verified.
The Income Tax Department states that the current time limit for e-verification or submission of ITR-V is 30 days from the date of filing the return. If verification occurs after that period, the date of verification can be treated as the date of furnishing the return, with applicable consequences.
Businesses should therefore confirm that the authorized person has completed the required verification.
19. Preserve Tax Audit and ITR Records
Businesses should maintain copies of important records after filing.
These can include:
- Tax audit report
- Form 3CD
- Financial statements
- ITR acknowledgement
- Tax computation
- Tax payment challans
- TDS/TCS reconciliations
- GST reconciliation
- Fixed asset schedule
- Depreciation workings
- Loss schedules
- Supporting documents
- Important correspondence with the auditor
Maintaining an organized compliance file can make future assessments, notices and audits easier to handle.
20. Start Preparing for Tax Year 2026–27
October 2026 is also a good time to separate the old-Act and new-Act compliance records.
The income earned during FY 2025–26 is reported for AY 2026–27 under the Income Tax Act, 1961. Income earned during FY 2026–27 belongs to Tax Year 2026–27 and is governed by the Income Tax Act, 2025.
Businesses should therefore maintain clear records from April 2026 onward for:
- Income
- Expenses
- TDS/TCS
- Advance tax
- Capital transactions
- Depreciation
- Losses
- Tax deductions
- Other new-Act compliance requirements
This separation can prevent confusion when the next tax cycle begins.
October 2026 Post-Tax-Audit Checklist for Businesses
Before filing the ITR, businesses can use the following checklist:
- Tax audit report finalized
- Form 3CD reviewed
- Financial statements finalized
- Taxable income calculated
- ITR data reconciled with Form 3CD
- GST reconciliation completed
- TDS/TCS reconciled
- Advance tax reconciled
- Self-assessment tax calculated
- Depreciation verified
- Disallowances reviewed
- MSME payments checked
- Related-party transactions reviewed
- Brought-forward losses verified
- Outstanding demands checked
- Bank accounts reconciled
- ITR filed
- ITR verified
- Tax records preserved
Common Mistakes Businesses Should Avoid After Tax Audit
Treating the Tax Audit as the End of Compliance
A tax audit is an important milestone, but the ITR still needs to be prepared and filed correctly.
Copying Audit Figures Without Reconciliation
Businesses should not blindly transfer figures from Form 3CD to the ITR. The tax computation and applicable schedules should be reviewed.
Ignoring TDS Mismatches
Even a properly prepared tax return can create issues if TDS or TCS credits do not match the income-tax records.
Forgetting ITR Verification
Uploading the return without completing verification within the prescribed timeline can create filing-related consequences.
Mixing FY 2025–26 and Tax Year 2026–27
This is especially important during the 2026 transition. FY 2025–26 belongs to AY 2026–27 under the old Act, while FY 2026–27 is the first Tax Year under the new Act framework.
What Businesses Should Do After Filing the ITR
Post-filing compliance should also be monitored.
Businesses should:
- Download the ITR acknowledgement.
- Confirm successful e-verification.
- Monitor the return-processing status.
- Check for any communication from the Income Tax Department.
- Preserve the filed return and supporting documents.
- Monitor refund status, if applicable.
- Respond to notices within the specified timeline.
Filing the return on time is important, but businesses should also monitor what happens after filing.
Conclusion
October 2026 is a critical compliance period for businesses that have completed their FY 2025–26 tax audit.
After the audit, businesses should not simply move on to the next financial year. They should carefully reconcile the tax-audit report with the ITR, verify TDS and advance-tax credits, review taxable income, check disallowances and losses, settle any remaining tax liability and complete ITR verification.
For AY 2026–27, FY 2025–26 income continues to be governed by the Income Tax Act, 1961, and the tax-audit report generally needs to be filed by 30 September 2026 while the audited ITR is generally due by 31 October 2026.
At the same time, businesses should begin maintaining clean records for Tax Year 2026–27 under the new Income Tax Act, 2025. Separating the two compliance frameworks now can make future tax filings significantly easier.
Frequently Asked Questions
1. What should a business do after completing a tax audit in 2026?
The business should review the final audit report, reconcile Form 3CD with the books and ITR, calculate final taxable income, reconcile TDS/TCS and advance tax, pay any remaining tax and file and verify the applicable ITR.
2. What is the ITR due date for audited businesses for AY 2026–27?
For standard non-transfer-pricing cases, the ITR due date is generally 31 October 2026. The tax-audit report is generally due one month earlier, on 30 September 2026.
3. Does the Income Tax Act, 2025 apply to FY 2025–26?
No. Income earned during FY 2025–26 is reported for AY 2026–27 under the Income Tax Act, 1961. The new Act applies to Tax Year 2026–27, corresponding to income earned during FY 2026–27.
4. Should Form 3CD and the ITR match?
Relevant information should be consistent between Form 3CD, the tax computation, books and the ITR. The Income Tax Department’s validation framework contains checks for audit-related information in the return.
5. What should businesses check in Form 3CD before filing the ITR?
Businesses should review turnover, depreciation, disallowances, statutory dues, TDS/TCS, loans and deposits, MSME-related information, related-party transactions and other applicable disclosures.
6. What happens if TDS in Form 26AS does not match the books?
The difference should be investigated before filing the ITR. The business should reconcile its TDS records, certificates, Form 26AS, AIS and books and claim only the eligible tax credit.
7. Is tax audit completed once Form 3CD is filed?
Tax-audit completion does not mean that all income-tax compliance for the year is finished. The applicable ITR still needs to be prepared, filed and verified.
8. How long do businesses have to verify the ITR?
The Income Tax Department currently provides a 30-day period from the date of ITR filing for e-verification or submission of ITR-V.
9. Should businesses check old income-tax demands after tax audit?
Yes. Outstanding demands from earlier assessment years should be reviewed because they can affect the taxpayer’s overall tax position and may require a response or rectification.
10. What should businesses prepare for Tax Year 2026–27?
Businesses should maintain separate records for income, expenses, TDS/TCS, advance tax, assets, deductions and other transactions under the new Income Tax Act, 2025. This helps avoid confusion between AY 2026–27 and Tax Year 2026–27 compliance.
Blog By : CA Junaid Khan
Written by CA Junaid Ahmed Khan, Junaid Khan & Co., Bhopal.
