Tax Audit under Section 44AB
Tax audit report under Section 44AB of the Income Tax Act, 1961 — Form 3CA or 3CB with Form 3CD particulars. Due date: 30 September (general); 31 October (transfer pricing cases). Applicable when business turnover exceeds ₹1 Cr (₹10 Cr for digital-payment businesses) or professional receipts exceed ₹50 L. Penalty for non-audit: Section 271B — 0.5% of turnover, up to ₹1.5 L.
More details are coming soon. Contact us to get started.
Applicability — Who Needs a Tax Audit?
Business — General
Turnover exceeds ₹1 crore in the previous year
Section 44AB(a)
Business — Digital Payments
Turnover exceeds ₹10 crore (where ≥95% receipts and payments are digital)
Section 44AB(a) read with Section 44AD
Professionals
Gross receipts exceed ₹50 lakh
Section 44AB(b)
Presumptive taxation opt-out (44AD)
Income declared below presumptive rate and total income exceeds basic exemption limit
Section 44AB(e)
Presumptive — Ship owners (44BB)
Income declared lower than 7.5% of aggregate of amounts
Section 44AB(c)
Presumptive — Contractors (44BBB)
Income declared lower than 10% of gross receipts
Section 44AB(d)
Charitable Trusts & Institutions
Total income exceeds ₹2.5 lakh before Section 11/12 exemption
Section 12AB registered entities
Audit Report Forms
Form 3CA
Business/profession already required to get accounts audited under any other law (e.g. Companies Act 2013)
Chartered Accountant
Form 3CB
Business/profession not required to be audited under any other law — audit solely under Section 44AB
Chartered Accountant
Form 3CD
Statement of particulars — filed together with Form 3CA or 3CB in both cases
Chartered Accountant (44 clauses of financial and tax disclosures)
Form 26 (proposed)
New unified format for AY 2026-27 proposed by ICAI / CBDT to replace 3CA/3CB/3CD
Effective date subject to notification
What We Do
- Applicability check — turnover/receipts computation, presumptive taxation opt-out analysis, and trust audit threshold review
- Review of books of account maintained under Section 44AA and reconciliation to ITR
- Form 3CD clause-by-clause review — all 44 clauses including loans, payments, TDS, capital gains, depreciation, MSME dues, and disallowances
- GSTR-2A/2B vs books reconciliation for GST-related 3CD disclosures
- TDS compliance check under Form 3CD Clause 34 — defaults, short deduction, and late payment
- Cash payment disallowance analysis under Section 40A(3) — Clause 21 of Form 3CD
- MSME dues analysis — payments outstanding beyond 45 days (Section 43B(h), Clause 22)
- Sections 36 and 37 expenditure review — admissibility of business expenses
- Form 3CA/3CB + Form 3CD digital filing with UDIN on ICAI portal and income tax e-filing portal
- Penalty risk assessment — Section 271B (0.5% of turnover, max ₹1.5L for failure to audit)
Key Dates
Tax audit report due (general cases)
30 September of the Assessment Year
Tax audit report due (TP cases)
31 October of the Assessment Year
ITR filing (tax audit cases)
31 October of the Assessment Year
Penalty for late audit (Section 271B)
0.5% of turnover/gross receipts, maximum ₹1,50,000
Frequently Asked Questions
What is the threshold for tax audit under Section 44AB?
For a business, the threshold is turnover exceeding ₹1 crore (₹10 crore where at least 95% of receipts and payments are in digital mode). For a professional, gross receipts exceeding ₹50 lakh. Additional triggers exist where a taxpayer with a business opts out of the presumptive taxation scheme under Section 44AD and their income exceeds the basic exemption limit — they must get audited for the next 5 years (Section 44AB(e)).
Which CA can conduct a tax audit?
A tax audit under Section 44AB must be conducted by a Chartered Accountant in practice, as defined under Section 288(2) of the Income Tax Act, 1961. A CA employee of the assessee cannot conduct the audit. Note: Secretarial Audit under Section 204 of the Companies Act, 2013 is a separate audit mandatorily performed by a Company Secretary in Practice — a CA cannot conduct secretarial audit.
What is Form 3CD and how many clauses does it have?
Form 3CD is the statement of particulars required to be furnished under Section 44AB. It has 44 clauses covering entity details, accounting method, books of account, partner/member details, inventory, depreciation, capital gains, loans, TDS defaults, expenditures disallowed under various sections (40A(3), 43B, Section 36, Section 37), MSME dues, and GST-related disclosures. Form 3CD is filed as an attachment to Form 3CA (for entities under mandatory audit) or Form 3CB (for entities audited solely under Section 44AB).
What is the new Form 26 for AY 2026-27?
ICAI and CBDT have proposed a new unified audit form (Form 26) to replace the existing Form 3CA/3CB/3CD combination for AY 2026-27. The new form aims to rationalise disclosures, reduce duplication with other returns, and incorporate updated statutory requirements. The effective date is subject to CBDT notification. We track all form changes and update audit processes accordingly.
What is the penalty for not getting a tax audit done?
Under Section 271B, failure to get accounts audited under Section 44AB, or failure to furnish the audit report, attracts a penalty of 0.5% of the total turnover or gross receipts of the business or profession in the previous year, subject to a maximum of ₹1,50,000. The penalty is not automatic — the Assessing Officer must issue a show-cause notice and consider reasonable cause explanations.
How many tax audit assignments can one CA take?
ICAI guidelines cap the number of tax audit assignments per CA at 60 per financial year (including both individual CAs and CA firms). ICAI tightened compliance and field-level validation of tax audit assignment counts in recent years. This means you should engage your CA well before the September deadline to ensure availability.
What Comes Next
Related Services
Tax
Direct Tax Advisory
Tax audit is typically part of a broader direct tax compliance engagement — ITR filing, advance tax, TDS, and Section 44AB audit all handled in one annual retainer.
Tax
Transfer Pricing
Companies with international transactions must get a transfer pricing audit in addition to the Section 44AB audit. The TP audit due date is 31 October (one month later). Both are coordinated together.
Operations
Bookkeeping & Accounting
Section 44AA requires maintenance of specified books of account. A clean bookkeeping engagement throughout the year significantly reduces the time and queries involved in Section 44AB audit.