Income Tax Audit under Section 44AB of the Income-tax Act, 1961 is the statutory examination of a taxpayer's books of accounts and financial records by a Chartered Accountant (CA), who certifies the accuracy of income declared, deductions claimed, and compliance with the provisions of the Act. Unlike a company audit under the Companies Act, a tax audit is exclusively for income-tax purposes and is mandatory when gross receipts or turnover crosses prescribed thresholds — currently ₹1 crore for business (₹10 crore if cash transactions ≤ 5%) and ₹50 lakh for professionals under Section 44ADA — or when a taxpayer opts out of the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE but declares income below the deemed profit.
The tax audit report is submitted in Form 3CA-3CD (for entities already audited under another law) or Form 3CB-3CD (for others) on the Income Tax Portal. The due date is 30 September of the assessment year (or as extended by CBDT). Failure to get the audit done or to furnish the report in time attracts a penalty under Section 271B — 0.5% of turnover / gross receipts or ₹1.5 lakh, whichever is lower. Our CA team ensures your tax audit is accurate, timely filed, and fully aligned with ICAI Standards on Auditing (SA) and reporting requirements under Clauses 1–44 of Form 3CD.
Mandatory for businesses with turnover exceeding ₹1 crore; relaxed to ₹10 crore if cash receipts & payments are ≤ 5% each of total receipts / payments; Form 3CB-3CD for non-company audits.
Mandatory for professionals (doctors, lawyers, architects, CAs, engineers, etc.) with gross receipts exceeding ₹50 lakh in the previous year; Form 3CB-3CD where profession not separately audited.
Taxpayers covered under Sec 44AD / 44ADA / 44AE who declare income below the deemed profit (8% / 6% or 50%) are mandatorily required to maintain books and get a tax audit regardless of turnover.
For entities already statutorily audited under Companies Act 2013 or any other law — the tax auditor refers to the statutory audit report; Form 3CA is signed along with detailed 44-clause Form 3CD.
Mandatory for international transactions or specified domestic transactions with related parties; Form 3CEB by a CA is filed separately; TP documentation, benchmarking analysis, arm's-length pricing.
Minimum Alternate Tax audit for companies (Sec 115JB) and Alternate Minimum Tax for non-corporate taxpayers (Sec 115JC); book profit computation, adjustments, and Schedule MAT reporting in ITR.
Trusts / institutions registered under Sec 12A / 12AB or approved under Sec 10(23C) must file audited accounts in Form 10B / 10BB along with ITR-7; 85% application of income mandatory.
NRI / foreign companies in oil exploration (Sec 44BB), civil construction (Sec 44BBB), aircraft / ships (Sec 44BBA); opting out of presumptive triggers audit; DTAA & Schedule FA disclosures.
Business turnover > ₹1Cr (₹10Cr digital), professional receipts > ₹50L, or presumptive opt-out below deemed profit — audit mandatory by a practicing CA.
Detailed statement covering particulars of books, method of accounting, depreciation, loans, payments to related parties, TDS defaults, deemed income, capital gains, and MSME compliance.
Businesses with turnover ≤ ₹3Cr may declare 8% (cash) or 6% (digital) as profit; no books required; opting out for 5 years bars re-entry; triggers mandatory audit if below threshold.
Professionals with receipts ≤ ₹75L (FY 2024-25 enhanced) may declare 50% as income; no books; opt-out triggers audit if income below 50%.
Failure to get audit done or furnish report by due date — penalty of 0.5% of turnover / gross receipts or ₹1.5 lakh, whichever is lower; reasonable cause defence available.
Tax audit report must be uploaded by the CA and accepted by the taxpayer on the Income Tax Portal by 30 Sep of the assessment year (or CBDT extended date); ITR due date linked.
Rule 6G prescribes Form 3CA (for statutory audit entities) or 3CB (for others) + Form 3CD; CA must be a member in practice; digital signature mandatory for e-filing.
International transactions or specified domestic transactions above ₹20Cr — Form 3CEB by CA; TP study, arm's-length benchmarking, CbCR / master file obligations.
Form 3CD Clause 22 requires reporting of payments to MSME suppliers beyond 45 days — disallowance under Sec 43B(h) if not paid within time; Schedule MSME in ITR.
Clause 31 of Form 3CD — loans / deposits ≥ ₹20,000 in cash (Sec 269SS) and repayments ≥ ₹20,000 in cash (Sec 269T); penalties Sec 271D / 271E; strict reporting obligation.
| Category | Threshold / Trigger | Form | Due Date | Penalty for Default |
|---|---|---|---|---|
| Business (Sec 44AB(a)) | Turnover > ₹1 Crore | 3CB + 3CD | 30 Sep AY | 0.5% / ₹1.5L |
| Business – Digital (Sec 44AB(a)) | Turnover > ₹10 Crore (cash ≤ 5%) | 3CB + 3CD | 30 Sep AY | 0.5% / ₹1.5L |
| Professional (Sec 44AB(b)) | Gross Receipts > ₹50 Lakh | 3CB + 3CD | 30 Sep AY | 0.5% / ₹1.5L |
| Company / LLP (statutory audit) | Turnover above limit OR Sec 44AB trigger | 3CA + 3CD | 30 Sep AY | 0.5% / ₹1.5L |
| Presumptive Opt-Out (44AD/44ADA) | Income below 8%/6%/50% declared | 3CB + 3CD | 30 Sep AY | 0.5% / ₹1.5L |
| Transfer Pricing (Sec 92E) | International / SDT above threshold | Form 3CEB | 30 Nov AY | Sec 271AA / 271G |
| Trust / Charitable (Sec 12A) | Total income > basic exemption | Form 10B / 10BB | 30 Sep AY | Sec 12A registration risk |
| MAT (Sec 115JB) | Book profit > normal tax | Form 29B | With ITR | Disallowance of credit |
Complete Form 3CA/3CB + 3CD preparation, Clause 1–44 verification, DSC filing on IT Portal; for businesses, professionals, and companies across industries.
Line-by-line Clause review: books of accounts, depreciation, TDS defaults, related-party payments, deemed income, Sec 269SS/T, MSME Clause 22, capital gains, and Sec 43B deductions.
Sec 44AD / 44ADA eligibility analysis, opt-in / opt-out planning, 5-year re-entry bar advisory, profitability modelling, audit trigger prevention.
International transaction identification, TP documentation (master file / local file), benchmarking study, arm's-length pricing, Form 3CEB filing, CbCR compliance.
Book profit computation under Sec 115JB, MAT credit utilisation, Schedule MAT in ITR-6, AMT for LLP under Sec 115JC, Form 29C preparation and filing.
Form 10B / 10BB preparation, 85% application compliance, corpus accounting, Sec 13 violation check, ITR-7 filing, FCRA audit coordination.
Books maintenance advisory per Sec 44AA, prescribed registers, voucher systems, Tally / accounting software reconciliation to meet audit standards and Clause 9 requirements.
Form 26AS / AIS / TIS reconciliation, TDS default identification, Clause 34 TDS compliance reporting, lower deduction certificates, ITR Schedule TDS preparation.
Turnover reconciliation between GSTR-1 / 3B and ITR, ITC vs expenses cross-check, Clause 14 inventory reconciliation, 26AS with P&L, discrepancy resolution before filing.
Sec 44BB / 44BBB / 44BBA presumptive audits for NRI / foreign entities; DTAA position reporting; Schedule FA / FSI / FSI disclosures; Form 3CEB where applicable.
Sec 271B penalty notices, reasonable cause submissions, appeal to CIT(A) / ITAT on audit quality disputes, revised / rectified Form 3CD filing on IT portal.
ITR-3 / 4 / 5 / 6 / 7 filing after audit; Schedule BP / CYLA / BFLA / CG / MSME / TDS / SI / AT; advance tax projection; Sec 234A / B / C interest computation and minimisation.
Business exceeds ₹1Cr (or ₹10Cr with digital relaxation) or professional receipts cross ₹50L — mandatory audit by 30 Sep.
Reporting profit below 8%/6% (Sec 44AD) or 50% (Sec 44ADA) — audit mandatory regardless of turnover size.
Companies and LLPs required to file Form 3CA-3CD on IT portal; statutory audit and tax audit must align; MAT Form 29B required.
International transactions with associated enterprises or SDT above threshold trigger transfer pricing audit and mandatory Form 3CEB filing.
New entities must assess whether turnover will cross audit threshold; books of account setup, TDS registration, and advance tax compliance from day one.
Notice under Sec 143(2) / 148 / 133(6) — existing tax audit report is the primary defence document; quality audit reduces reassessment risk.
Form 3CD Clause 22 requires MSME payment disclosure; Sec 43B(h) disallowance risk for delayed payments; advance planning and reporting needed.
Trust / institution with income above basic exemption must audit accounts and file Form 10B / 10BB with ITR-7 for Sec 12A / 12AB compliance.
Assess turnover, profit rate, entity type; confirm Sec 44AB / 44AD / 92E triggers; identify applicable forms and due dates.
Verify books of accounts, reconcile GST / TDS / bank with P&L, identify discrepancies and rectify before audit.
Clause-by-clause verification of all 44 clauses — depreciation, related-party, MSME, cash transactions, TDS defaults, deemed income.
CA signs Form 3CA / 3CB + 3CD with DSC on IT Portal; taxpayer accepts report; audit trail completed before due date.
ITR filed post-audit acceptance; Schedule BP / AT / MSME; advance tax compliance; penalty avoidance; scrutiny defence readiness.
Partner with our Chartered Accountants for end-to-end income tax audit services — Section 44AB audit, Form 3CA/3CB-3CD, transfer pricing Form 3CEB, MAT Form 29B, trust audits, GST-ITR reconciliation, and complete ITR filing post-audit.
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