Tax Audit Under Section 44AB: Who Needs It, Thresholds and Due Dates

A tax audit is an audit of a taxpayer's accounts from an income-tax perspective, required once turnover or receipts cross set limits. It applies to companies, LLPs, firms, proprietors and professionals alike. This guide explains who needs one.

Note: the thresholds below are under Section 44AB of the Income-tax Act, 1961, which governs years up to FY 2025-26. The Income-tax Act, 2025 applies from tax year 2026-27 and continues the tax audit under renumbered provisions.

Businesses

• A tax audit is required if total sales, turnover or gross receipts exceed ₹1 crore in the year.
• The limit is ₹10 crore if cash receipts are no more than 5% of total receipts and cash payments are no more than 5% of total payments.

Professionals

A professional — a doctor, lawyer, architect, consultant and so on — needs a tax audit if gross receipts exceed ₹50 lakh in the year.

Presumptive Taxation Cases

Businesses and professionals using presumptive taxation schemes can also need a tax audit if they declare profits lower than the presumptive rate and their total income exceeds the basic exemption limit, in the circumstances set out in the relevant section.

The Reports

• Form 3CA: where the accounts are already audited under another law, such as a company's statutory audit.
• Form 3CB: where the accounts aren't otherwise audited.
• Form 3CD: the detailed statement of particulars, filed with either.

Due Date

The tax audit report must be uploaded by the specified date, which is generally one month before the due date for filing the income-tax return in audit cases. The taxpayer then approves the report on the income-tax portal, and files the return.

Penalty

Failing to get the accounts audited or to furnish the report can attract a penalty of 0.5% of turnover or gross receipts, up to ₹1.5 lakh, unless there's a reasonable cause.

Common Misunderstandings

• A company's statutory audit doesn't replace the tax audit — a company above the limits needs both.
• The ₹10 crore limit depends on cash receipts and payments both being within 5%.
• Crossing the threshold is tested each year separately.

Getting Help

Think Filing confirms whether a tax audit applies, carries it out, and files the report and return on time.