What is the penalty for not conducting a mandatory tax audit?

0.5% of total sales or gross receipts, maximum ₹1,50,000 under Section 271B. Penalty may be waived for reasonable cause if applied for in advance.

Can a tax audit and Companies Act statutory audit be done by the same auditor?

Yes. For companies, the statutory auditor typically also conducts the income tax audit, certifying using Form 3CA which is based on the statutory audit already conducted.

Tax Audit — Income Tax Act, Section 44AB

Q: What is the turnover threshold for mandatory tax audit under Section 44AB?

₹1 crore for businesses (₹10 crore if 95%+ transactions are through banking channels) and ₹50 lakhs for professionals by gross receipts.

Q: What is Form 3CD and what does it contain?

Form 3CD is a 44-clause detailed statement covering accounting methods, depreciation, TDS compliance, loans, related party transactions, and prior period items attached to the tax audit report.

Q: What is the due date for filing the income tax audit report?

30 September of the assessment year. Transfer pricing cases may have a 31 October deadline. Extensions are periodically notified by the Income Tax Department.

Tax audit under Section 44AB of the Income Tax Act, 1961 is a mandatory audit for businesses and professionals exceeding prescribed turnover or gross receipt thresholds. We provide comprehensive tax audit services ensuring accurate computation of income, proper maintenance of books, and timely filing of the tax audit report to avoid penalties.

Section 44AB Tax Audit

Conducting tax audit under Section 44AB for businesses with turnover exceeding ₹1 crore (or ₹10 crore for cash-based businesses) and professionals with gross receipts exceeding ₹50 lakhs.

Form 3CA / 3CB Preparation

Preparation and certification of Form 3CA (for taxpayers already under statutory audit) or Form 3CB (for others), along with the detailed Form 3CD tax audit report.

Form 3CD Reporting

Comprehensive preparation of the 44-clause Form 3CD report covering all statutory particulars — depreciation, loans, related parties, TDS compliance, and prior year adjustments.

Books of Accounts Review

Reviewing and verifying the books of accounts maintained by the taxpayer to ensure compliance with Section 44AA requirements and correct reflection of income and expenditure.

Presumptive Taxation Advisory

Advising on presumptive taxation under Sections 44AD, 44ADA, and 44AE and determining whether opting out of presumptive taxation triggers tax audit obligations.

Income Tax Audit Representation

Representing before the Income Tax Department in cases where the tax audit report is questioned or where additional information is sought by the Assessing Officer.

What is a Tax Audit Under the Income Tax Act?

A tax audit under Section 44AB of the Income Tax Act is an examination of the books of accounts of a taxpayer by a Chartered Accountant to verify that the income, deductions, and tax liability have been correctly computed. The auditor certifies the financial statements and furnishes a detailed report (Form 3CD) containing specific information required by the Income Tax Department.

The tax audit is distinct from the statutory audit under the Companies Act — while the Companies Act audit covers a company's full financial reporting obligations, the income tax audit focuses specifically on tax computation, TDS compliance, and income disclosure. Both may be required simultaneously for companies above the threshold. The tax audit report must be filed by 30 September of the relevant assessment year.

Who is Required to Get a Tax Audit Done?

Businesses with total sales, turnover, or gross receipts exceeding ₹1 crore in the previous year (threshold raised to ₹10 crore where cash transactions do not exceed 5% of total receipts and payments)
Professionals (doctors, lawyers, architects, CAs, engineers) with gross receipts exceeding ₹50 lakhs
Taxpayers declaring income lower than the presumptive income under Sections 44AD, 44ADA, or 44AE who are required to maintain books of accounts
Businesses covered under other presumptive taxation provisions where actual income is lower than the deemed income

Why Choose Us for Income Tax Audit Services?

Our experienced team of Chartered Accountants specialises in income tax audits across diverse industries — manufacturing, trading, services, real estate, and professional practices. We ensure thorough preparation of Form 3CD, accurate clause-by-clause analysis, and timely filing before the due date to avoid the significant penalty of 0.5% of turnover (maximum ₹1,50,000) for non-compliance.

Whether you need a standalone income tax audit or a combined tax and Companies Act statutory audit, we deliver accurate, well-documented audit reports that stand up to scrutiny.

Frequently Asked Questions

What is the turnover threshold for mandatory tax audit under Section 44AB?

For businesses, the threshold is ₹1 crore of total sales, turnover, or gross receipts. This is raised to ₹10 crore if cash receipts and cash payments do not exceed 5% of the respective totals (i.e., 95% or more of transactions are through banking channels). For professionals, the threshold is ₹50 lakhs of gross receipts. These thresholds apply for the previous year (financial year) relevant to the assessment year.

What is Form 3CD and what does it contain?

Form 3CD is the detailed statement of particulars that must be attached to the tax audit report. It contains 44 clauses covering information such as the method of accounting, changes in accounting policies, depreciation computation, amounts of income from undisclosed sources, TDS compliance, particulars of loans and advances, related party transactions, specified domestic transactions, and prior period items. It is the most substantive part of the tax audit report and must be prepared with great care.

What is the due date for filing the income tax audit report?

The income tax audit report in Form 3CA/3CB and Form 3CD must be filed electronically on the Income Tax e-filing portal by 30 September of the assessment year (i.e., within 6 months of the end of the financial year). For taxpayers who are also required to file transfer pricing reports, the due date may be extended to 31 October. The Income Tax Department periodically extends these dates — checking for current notifications before the deadline is recommended.

What is the penalty for not conducting a tax audit when mandatory?

The penalty under Section 271B for failure to get the accounts audited or to furnish the tax audit report is 0.5% of the total sales, turnover, or gross receipts, subject to a maximum of ₹1,50,000. However, if there is a reasonable cause for the failure (such as natural calamities, sudden illness, or death of the auditor), the penalty may be waived. It is advisable to apply for extension in advance if facing delays.

Can a tax audit and a Companies Act statutory audit be done by the same auditor?

Yes. For companies, the same Chartered Accountant (or CA firm) appointed as the statutory auditor under the Companies Act typically also conducts the income tax audit. In fact, Form 3CA (used when the taxpayer is already subject to statutory audit) requires the same auditor to certify the tax audit particulars based on the statutory audit already conducted. Only in rare cases where the statutory audit and tax audit are conducted by different auditors does Form 3CB apply to a company.

Get Your Tax Audit Done Before the Deadline

Accurate Form 3CD preparation, timely e-filing, and complete income tax audit support for businesses and professionals.

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