Section 44AB Income Tax Audit: Income tax audit is mandatory examination of a taxpayer’s books of accounts and financial records by a Chartered Accountant to verify accuracy, compliance with income tax laws & Regulations, and proper reporting of income and expenses (I&E). Mandatory under Income Tax Section 44AB of the Income Tax Act in India, it ensures transparency and reduces tax evasion for businesses with turnover exceeding Rs. 1 crore (or Rs. 10 crore if 95% transactions are digital) and professionals with gross receipts over Rs. 50 lakhs.
Items reportable in the Tax Audit Report
Taxpayers are required to maintain books of accounts and get them audited if their gross turnover or receipts during the previous year exceed the prescribed threshold limit. The requirement to keep the books of accounts is specified under Section 44AA, and to get them audited is mentioned in Section 44AB of the Income-tax Act. The purpose of a tax audit is to ensure that the taxpayer maintains proper books of account and complies with the provisions of the Income-tax Act.
The audit report under Section 44AB shall be furnished electronically at the e-filing portal in Form No. 3CA/3CB-3CD.The tax audit report has to be furnished in the forms prescribed below:
| Category of Taxpayer | Form for Audit Report | Annexure to Audit Report |
| If the books of account of the assessee are required to be audited under any other law | Form 3CA | Form 3CD |
| In any other case | Form 3CB | Form 3CD |
Form No. 3CA/3CB is a format of audit report, whereas Form 3CD is a Statement of particulars required to be furnished under Section 44AB of the Income-tax Act.
The disclosure and reporting in various clauses of Form 3CD are to be done as under:
| Clauses | Description |
| Clause 1 | Clause 1 of Form No. 3CD requires the tax auditor to state the name of the assessee. |
| Clause 2 | Clause 2 of Form No. 3CD requires the tax auditor to state the address of the assessee. |
| Clause 3 | Clause 3 of Form No. 3CD requires the tax auditor to state the PAN or Aadhaar Number of the assessee. |
| Clause 4 | Clause 4 of Form No. 3CD requires the tax auditor to state • Whether the assessee is liable to pay indirect tax like excise duty, service tax, sales tax, goods and services tax, customs duty, etc. • If yes, please furnish the registration number or GST number, or any other identification number allotted for the same. |
| Clause 5 | The tax auditor is to state the “status” of the assessee against clause 5. Status here means status in accordance with the definition of ‘person’ in section 2(31) of the Act. (i.e. Individual / HUF / Firm / LLP / Company / Trust / AOP/BOI / Local Authority / Artificial Juridical Person / Co-operative Society / Co-operative Bank) |
| Clause 6 | The tax auditor is to state the “Previous year” against clause 6. |
| Clause 7 | The tax auditor is to state the “Assessment Year” against clause 7. |
| Clause 8 | Clause 8 requires the tax auditor to indicate the relevant clause of section 44AB under which the audit has been conducted. |
| Clause 8A | Clause 8A requires the tax auditor to indicate whether the assessee has opted for taxation under Section 115BA / 115BAA / 115BAB / 115BAC / 115BAD/115BAE |
| Clause 9 | Clause 9 applies only to firms, LLPs, Association of Persons (AOPs), and Body of Individuals (BOIs). The requirements of clause 9 are as under:Clause 9(a) – Names of partners/members of firm/LLP/AOP/BOI and their Profit Sharing RatioClause 9(b) – Changes in partners/members or their Profit Sharing Ratio |
| Clause 10 | Clause 10 is applicable to all assessees covered under tax audit. The requirement of clause 10 is as under:Clause 10(a) – Nature of business or professionClause 10(b) – Clause 10(b) is applicable and question in clause 10(b) is to be answered as “Yes” only if • There is an addition of a new line of business/profession during the previous year; or • There is discontinuance of any business/profession during the previous year; |
| Clause 11 | Clause 11(a) – Whether books of account are prescribed under section 44AA, if yes, list of books so prescribed.Clause 11(b) – List of books of account maintained and the address at which the books of account are kept. (In case books of account are maintained in a computer system, mention the books of account generated by such computer system. If the books of account are not kept at one location, please furnish the addresses of locations along with the details of books of account maintained at each location.)Clause 11(c) – List of books of account and nature of relevant documents examined. Clause 11(a) will apply only in respect of the assessees for whom books of account have been prescribed under section 44AA. However, Clause 11(b) and 11(c) shall apply to all assessees, whether or not they are assessees for whom books of account have been prescribed under section 44AA. |
| Clause 12 | The following are the requirements of clause 12 : • Whether the profit and loss account includes any profits and gains assessable on presumptive basis [under sections 44AD, 44ADA, 44AE, 44AF (non-operative with effect from the assessment year 2011-12), 44B, 44BB, 44BBA, 44BBB, 44BBC , Chapter XII-G, First Schedule or Any other relevant section]? • If yes, the following information should be indicated against clause 12 : ■ The amount; and ■ The relevant section of the Income-tax Act, 1961. |
| Clause 13 | Clause 13(a) – Method of accounting employed in the previous year.Clause 13(b) – Whether there had been any change in the method of accounting employed vis-a-vis the method employed in the immediately preceding previous year.Clause 13(c) – If the answer to (b) above is in the affirmative, give details of such change, and the effect thereof on the profit or loss.Clause 13(d) – Whether any adjustment is required to be made to the profits or loss for complying with the provisions of income computation and disclosure standards notified under section 145(2).Clause 13(e) – If the answer to (d) above is in the affirmative, give details of such adjustments.Clause 13(f) – Disclosure as per ICDS.Clauses 13(a) to (c) apply to all assessees. However, Clauses 13(d) to (f) apply only to assessees following the mercantile system of accounting as the ICDSs under section 145(2) apply only to assessees following the mercantile system of accounting. |
| Clause 14 | Clause 14(a) requires the tax auditor to state the method of valuation of closing stock in the previous year.Clause 14(b) is applicable in case of deviation from the method of valuation prescribed under Section 145A and the effect thereof on the profit or loss. |
| Clause 15 | Particulars of capital asset converted into stock-in-trade has to be reported against this clause. (i.e. Description of capital asset, Date of acquisition, Cost of acquisition, and Amount) |
| Clause 16 | Clause 16 requires the tax auditor to report the items covered by sub-clauses (a) to (e) which have not been credited to the profit and loss account. The tax auditor is required to report under this clause only those items that can be found from a scrutiny of the books and other information made available for a tax audit. The tax auditor has no obligation to report those items which are outside the books of account and which cannot be found by normal audit procedures.Clause 16(a) requires the tax auditor to report items falling within the scope of section 28 which have not been credited to the profit and loss account.Clause 16(b) refers to refunds, proforma credits, and drawbacks of excise duty, customs duty, sales tax, VAT, service tax, GST, and other indirect taxes.Clause 16(c) requires the tax auditor to report ‘escalation claims’ not credited to the profit and loss account.Clause 16(d) requires the tax auditor to report ‘any other income’ not credited to the profit and loss account.Clause 16(e) requires the tax auditor to report capital receipts not credited to the profit and loss account.Here, sub-clauses (b) and (c) will not apply to an assessee following the cash basis of accounting. However, Other sub-clauses of clause 16 – sub-clauses (a), (d), and (e) will apply irrespective of the method of accounting followed by the assessee. |
| Clause 17 | Reporting obligations under clause 17 apply when the following conditions are satisfied: ■ There is a transfer by the assessee. ■ Transfer is of land or building or both. It does not matter whether such land or building or both is held as a capital asset or stock in trade as clause 17 refers to both section 50C and section 43CA. ■ Transfer is for consideration. ■ Such consideration is less than the stamp duty value. ■ Transfer is during the previous year. |
| Clause 18 | Clause 18 requires particulars of depreciation allowable as per the Income-tax Act, 1961 in respect of each asset or block of assets, as the case may be, in the following form:-(a) Description of asset/block of assets.(b) Rate of depreciation.(c) Actual cost of written down value, as the case may be.(ca) Adjustment made to the written down value under – (i) under the proviso to section 115BAA(3) (for assessment year 2020-21 only); (ii) under the first proviso to section 115BAC(3) or the proviso to section 115BAD(3) (for assessment year 2021-22 only); (iii) under the second proviso to section 115BAC(3) (for assessment year 2024-25 only).(cb) Adjustment made to the written down value of Intangible asset due to excluding the value of goodwill of a business or profession.(cc) Adjusted written-down value.(d) Additions/deductions during the year with dates; in the case of any addition of an asset, date put to use; including adjustments on account of – ■ Central Value Added Tax credits claimed and allowed under the Central Excise Rules, 1944, in respect of assets acquired on or after 1st March, 1994, ■ change in the rate of exchange of currency, and ■ subsidy or grant or reimbursement, by whatever name called.(e) Depreciation allowable.(f) Written down value at the end of the year. |
| Clause 19 | Clause 19 required particulars of the amount debited to the profit and loss account and the amount admissible as per the provisions of the Income-tax Act, 1961 under Section 33AB, 33ABA, 35(1)(i), 35(1)(ii), 35(1)(iia), 35(1)(iii), 35(1)(iv), 35(2AA), 35(2AB), 35ABA, 35ABB, 35AD, 35CCA, 35CCC, 35CCD, 35D, 35DD, 35DDA, 35E, any other relevant section. |
| Clause 20 | Clause 20(a) – Any sum paid to an employee as bonus or commission for services rendered, where such sum was otherwise payable to him as profits or dividend. [Section 36(1)(ii)]Clause 20(b) – Details of contributions received from employees for various funds as referred to in section 36(1)(va). |
| Clause 21 | Clause 21(a) – This clause requires details of the amount debited to the profit and loss account, being in the nature of capital expenditure, personal expenditure, advertisement expenditure, etc.Clause 21(b) – Clause 21(b) sets out a format to present information of inadmissible expenses under clause (a) of section 40 sub-clause-wise.Clause 21(c) – Amounts debited to profit and loss account being, interest, salary bonus, commission, or remuneration inadmissible under section 40(b)/40(ba) and computation thereof. This clause applies only to partnership firms/Limited Liability Partnerships (LLPs)/AOPs/BOIs.Clause 21(d) – ■ Clause 21(d)(A) requires the tax auditor to state “On the basis of the examination of books of account and other relevant documents/evidence, whether the expenditure covered under section 40A(3) read with rule 6DDA were made by account payee cheque drawn on a bank or account payee bank draft”. ■ Clause 21(d)(B) of Form No.3CD requires the tax auditor to state “on the basis of the examination of books of account and other relevant documents/evidence, whether the payment referred to in section 40A(3A) read with rule 6DDA were made by account payee cheque drawn on a bank or account payee bank draft”.Clause 21(e) – This clause requires reporting of “provision for payment of gratuity not allowable under section 40A(7)“. This clause is relevant only in the context of assessees following mercantile system of accounting.Clause 21(f) – Clause 21(f) requires reporting of amounts covered by section 40A(9).Clause 21(g) – This clause requires reporting particulars of contingent liabilities.Clause 21(h) – Clause 21(h) requires reporting of “amount of deduction inadmissible in terms of section 14A on respect of expenditure incurred in relation to total income which does not form part of total income”. This clause applies to all assessees who have taxable income as well as exempt income.Clause 21(i) – clause 21(i) requires reporting of amounts inadmissible in terms of proviso to section 36(1)(iii). |
| Clause 22 | Clause 22 requires particulars of the amount of interest inadmissible under Section 23 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 or total amount payable to micro or small enterprises under Section 15 of the MSMED Act during the previous year, along with a break-up of the amount paid within the prescribed time and the amount not paid within such time and disallowed for the year. |
| Clause 23 | Clause 23 requires particulars of payments made to persons specified under 40A(2)(b) (i.e. Name, PAN, Relation, Nature of transaction, and Amount) |
| Clause 24 | Clause 24 requires particulars of amounts deemed to be profits and gains under Section 32AC, 32AD, 33AB, 33ABA, or 33AC. |
| Clause 25 | Clause 25 requires particulars of amounts deemed to be profits and gains under Section 41 and computation thereof. (i.e. Name of person, Amount of income, Section, Description of transaction, and Computation if any) |
| Clause 26 | Clause 26 requires disclosures of sums incurred and paid which are referred to in clauses (a) to (g) [except clause (da) of section 43B(1)].Clause 26(i)(A) – Information required In respect of any sum referred to in section 43B, the liability for which pre-existed on the first day of the previous year but was not allowable in the assessment of any preceding previous year and (for clauses other than clause (h) of section 43B) was paid during the year, or not paid during the year.Clause 26(i)(B) – Information required In respect of any sum referred to in clauses (a),(b),(c),(d),(e),(f), or (g) of section 43B, the liability for which was incurred in the previous year and was paid on or before the due date for furnishing the return of income of the previous year under section 139(1), or not paid on or before the aforesaid date.Clause 26(i)(A) and Clause 26(i)(B) are relevant only for assessees following the mercantile system of accounting. |
| Clause 27 | Clause 27(a) – Amount of Central Value Added Tax Credits/Input Tax Credit(ITC) availed of or utilized during the previous year and its treatment in profit and loss account and treatment of outstanding Central Value Added Tax Credit/Input Tax Credit(ITC) in accounts. Clause 27(a) will apply to all assessees registered under GST/Central Excise.Clause 27(b) – Particulars of income or expenditure of the prior period credited or debited to the profit and loss account. Clause 27(b) dealing with prior period items applies only to assessees following the mercantile system of accounting. |
| Clause 29A | Clause 29A pertains to the amount received and forfeited which is taxable u/s 56(2)(ix). |
| Clause 29B | Clause 29B pertains to gifts/deemed gifts received which are taxable u/s 56(2)(x). Therefore, reporting in respect of clause 29B which pertains to ‘income from other sources’ is required only to the extent entries in relation to such income are made in books of business or profession. Tax auditor is not liable to report in respect of income covered by clause 29B if no entries in relation to that are made in books of business or profession.The reporting requirement is whether any amount is to be included as income chargeable under the head ‘Income from other sources’. If the answer is ‘yes’, the details to be furnished are (i) Nature of income and (ii) Amount. |
| Clause 30 | Clause 30 requires particulars of any amount borrowed on hundi or any amount due thereon (including interest on the amount borrowed) repaid, otherwise than through an account payee cheque. [Section 69D] |
| Clause 30A | Clause 30A requires particulars about whether the primary adjustment to transfer price, as referred to in sub-section (1) of section 92CE, has been made during the previous year. |
| Clause 30B | Clause 30B requires particulars about whether the assessee has incurred expenditure during the previous year by way of interest or of similar nature exceeding one crore rupees as referred to in sub-section (1) of section 94B. |
| Clause 30C | Clause 30C requires the tax auditor to report any impermissible avoidance arrangement (IAA) entered into by the assessee (auditee). Tax Auditor is required to report under clause 30C only if the following 4 ingredients are cumulatively satisfied: ■ There exists an ‘arrangement’ ■ ‘Main purpose’ or sole purpose of ‘arrangement’ is to obtain a ‘tax benefit’ ■ Such ‘Avoidance Arrangement’ is ‘Impermissible’ ■ Such arrangement for tax avoidance which is impermissible (Impermissible Avoidance Arrangement or IAA) has been ‘entered into’ or ‘carried out’ by the assessee |
| Clause 31 | Clause 31(a) deals with the acceptance of loan or deposit in an amount exceeding the limit specified in section 269SS (i.e. Rs. 20,000). Clause 31(a) is not applicable in respect of the following assessees : ■ any banking company; ■ any corporation established by a Central, State, or Provincial Act; ■ any Government company as defined in section 617 of the Companies Act, 1956 [now section 2(45) of the Companies Act, 2013].Clause 31(b) deals with the receipt of a specified sum i.e. money receivable as advance or otherwise in relation to the transfer of immovable property whether or not the transfer takes place.Clause 31(ba) requires reporting of particulars of each receipt in an amount exceeding the limit specified in section 269ST, in aggregate from a person in a day or in respect of a single transaction or on respect of transactions relating to one event or occasion from a person, during the previous year, where such receipt is otherwise than by a cheque or a bank draft or use of ECS through a bank account.Clause 31(bb) requires reporting of particulars of each receipt in an amount exceeding the limit specified in section 269ST as above received by a cheque or bank draft not being an account payee cheque or an account payee bank draft.Clause 31(bc) requires reporting of particulars of each payment made in an amount exceeding the limit in section 269ST, otherwise than by an account payee cheque or account payee bank draft or use of ECS, during the previous year.Clause 31(bd) requires particulars of each payment exceeding the limit specified in section 269ST, made by a cheque or bank draft, not being an account payee cheque or an account payee bank draft, during the previous year.Clause 31(c) pertains to the repayment of loans/deposits/specified advances in an amount exceeding the specified limit of Section 269T.Clause 31(d) pertains to the repayment of loans/deposits/specified advances which satisfies the following conditions :i. Repayment is made during the previous yearii. Repayment is made in an amount exceeding the limit in section 269T (i.e. Rs. 20,000)iii. Mode of repayment is immaterial – it does not matter whether the mode of repayment is section 269T compliant or not.iv. Such loans/deposits/advances repaid were received in contravention of section 269SS in the previous year i.e. these were received otherwise than by specified non-cash modes.Clause 31(e) pertains to the repayment of loans/deposits/specified advances by cheque or bank draft not crossed at all or crossed without the addition of words “account payee” and which satisfy conditions (i) to (iii) above.(Particulars at (c), (d), and (e) need not be given in the case of a repayment of any loan or deposit or any specified advance taken or accepted from the Government, Government company, banking company, or a corporation established by the Central, State or Provincial Act)”.Note: The relevant code indicating the nature of the amount/receipt/repayment is also required to be specified, where applicable. |
| Clause 32 | Clause 32(a) requires particulars of brought forward loss or depreciation allowance.Clause 32(b) requires the tax auditor to state whether a change in shareholding of the company has taken place in the previous year due to which the losses incurred prior to the previous year cannot be allowed to be carried forward in terms of section 79.Clause 32(c) requires the tax auditor to state whether the assessee has incurred any speculation loss referred to in section 73 during the previous year, if yes, then the tax auditor is required to furnish the details of the same against clause 32(c).Clause 32(d) requires the tax auditor to report whether the assessee has incurred any loss referred to in section 73A in respect of any specified business in the previous year. If so, the tax auditor shall furnish details of the same.Clause 32(e) requires the tax auditor to state whether the company is deemed to be carrying on a speculation business as referred to in Explanation to Section 73. If yes, the tax auditor should furnish the details of speculation loss if any incurred during the previous year against clause 32(e). |
| Clause 33 | Clause 33 prescribes a tabular format for reporting admissible deductions section-wise. Clause 33 casts a duty on the tax auditor to verify whether the assessee fulfils the conditions if any specified under the relevant provisions of the Income-tax Act, 1961 or Income-tax Rules, 1962, or any other guidelines, circular, etc., issued in this behalf. |
| Clause 34 | Clause 34(a) requires the tax auditor to state whether the assessee is required to deduct or collect tax at source, if yes, then the tax auditor is required to furnish the details of the same against clause 34(a).Clause 34(b) requires the tax auditor to state whether the assessee is required to furnish the statement of tax deducted or tax collected, if yes, then the tax auditor is required to furnish the details of the same against clause 34(b).Clause 34(c) requires the tax auditor to state Whether the assessee is liable to pay interest under section 201(1A) or section 206C(7), if yes, then the tax auditor is required to furnish the details of the same against clause 34(c). |
| Clause 35 | Clause 35(a) requires the quantitative details of principal items of goods traded, in case of trading concern.Clause 35(b) requires the quantitative details of the principal items of raw materials, finished products, and by-products, in case of manufacturing concern. |
| Clause 36 | This clause is redundant with effect from the assessment year 2021-22 as the Finance Act, 2020 has abolished DDT. |
| Clause 36A | Clause 36A requires the tax auditor to state whether the assessee has received any amount on the nature of dividend as referred to in sub-clause (e) of clause (22) of section 2, if yes, then the tax auditor is required to furnish the details of the same. |
| Clause 36B | Clause 36B requires the assessee to state whether any amount has been received for buyback of shares as referred to in sub-clause (f) of clause (22) of section 2, and if yes, to furnish the amount received and the cost of acquisition of the shares bought back. |
| Clause 37 | Clause 37 requires the tax auditor to state whether any cost audit was carried out, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the cost auditor. |
| Clause 38 | Clause 38 requires the tax auditor to state whether any audit was conducted under the Central Excise Act, 1944, if yes, give the details, if any, of disqualification or disagreement on any matter/ item/ value/ quantity as may be reported/identified by the auditor. |
| Clause 39 | Clause 39 requires the tax auditor to state whether any audit was conducted under section 72A of the Finance Act, 1994 in relation to the valuation of taxable services, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the auditor. |
| Clause 40 | Clause 40 requires the details regarding total turnover, gross profit/turnover, net profit/turnover, stock-in-trade/turnover, and material consumed/finished goods produced for the previous year and the preceding previous year. The details required to be furnished for principal items of goods traded or manufactured or services rendered. |
| Clause 41 | Clause 41 requires the details of demand raised or refund issued during the previous year under any tax laws other than the Income-tax Act, 1961 and Wealth-tax Act, 1957 along with details of relevant proceedings. |
| Clause 42 | Clause 42(a) requires the tax auditor to state whether the assessee is required to furnish a statement in Form No. 61 or Form No. 61A or Form No. 61B. If yes, then the status of furnishing the forms by the due date, whether forms contain all details required to be reported, list of required details not included in forms are to be reported in clause 42(b) in Tabular Format. |
| Clause 43 | Clause 43 requires the tax auditor to state whether the assessee or its parent entity or alternate reporting entity is liable to furnish the report as referred to in sub-section (2) of section 286, if yes, then the tax auditor is required to furnish the details of the same. |
| Clause 44 | Clause 44 of Form 3CD seeks details of the total expenditure incurred during the year. The break-up needs to be given for the expenditure in respect of entities registered under GST and relating to entities not registered under GST. |
[As amended by Finance Act, 2025]
Summary Table
| Form | Purpose | Applicable To |
| Form 3CA | Tax audit report | Assessee already audited under another law |
| Form 3CB | Tax audit report | Assessee not audited under any other law |
| Form 3CD | Annexure to 3CA/3CB | Detailed financial and compliance info |
| Form 3CE | Tax audit report | Non-residents/foreign companies receiving royalty or fees for technical services |
Section 44AB of the Income Tax Act for Tax Audit
Section 44AB of the Income Tax Act, 1961, lays down the provisions related to tax audits. It specifies the conditions under which certain categories of taxpayers are required to get their accounts audited. The primary objective of this section is to ensure that taxpayers maintain accurate and complete books of accounts and financial records.
This section plays a crucial role in capturing comprehensive information regarding a taxpayer’s income, taxes, deductions, and other financial details.
Once the audit is conducted, a Chartered Accountant is responsible for preparing and submitting the audit report electronically to the Income Tax Department.
Income Tax Audit Limit
Under Section 44AB of the Income Tax Act, 1961, certain individuals and entities are required to undergo a tax audit based on their turnover, gross receipts, or other specific conditions. The primary goal is to ensure proper reporting and compliance with tax laws.
Tax Audit Applicability Based on Turnover and Receipts
- Business:
- Normal Limit: Turnover exceeds ₹1 crore.
- Extended Limit: Turnover exceeds ₹10 crore if cash transactions (both receipts and payments) do not exceed 5% of total transactions.
- Professionals: Gross receipts exceed ₹50 lakh.
- Presumptive Taxation Scheme (Section 44AD/44ADA):
- If you claimed profits lower than 6%/8% (Business) or 50% (Profession) of turnover, and your total income exceeds the basic exemption limit.
Due Date and Penalties
- Audit Due Date: September 30th of the Assessment Year.
- Penalty for Non-Compliance: The lower of 0.5% of total sales/turnover/gross receipts or ₹1,50,000.
CA Audit Limit (ICAI)
A Chartered Accountant (CA) can sign a maximum of 60 tax audit reports per financial year, starting from April 1, 2026.
Important Notes
- Digital Transactions: To qualify for the ₹10 crore threshold, 95% or more of receipts and payments must be through non-cash methods (bank, UPI, cheque).
- 5-Year Lock-in: If a business opts out of the presumptive scheme (44AD) within 5 years, they are required to get an audit if their income exceeds the exemption limit.
Summary of Income Tax Audit Limit
| Type | Threshold Limit |
| Business (Normal) | Rs. 1 crore (Rs. 10 crore if cash transactions ≤ 5%) |
| Profession | Rs. 50 lakh |
| Presumptive Scheme | Based on lower profit declaration + exceeding the exemption limit |
Income Tax Audit Last Date
For the Financial Year 2024–25 (Assessment Year 2025–26), the due dates for completing the tax audit under the Income Tax Act are as follows:
The CBDT has extended the Tax Audit Report filing deadline for Assessment Year 2025-26, giving businesses, professionals, and partnership firms extra time to comply. Originally due on 30th September 2025, the deadline is now 31st October 2025. The Income Tax Return (ITR) filing deadline for taxpayers requiring an audit remains 31st October 2025.
Penalty for Non Filing or Delay Filing Tax Audit Report
If any taxpayer is required to get the tax audit done but fails to do so, the least of the following may be levied as a fee:
- 0.5% of the total sales, turnover, or gross receipts, or
- Rs 1,50,000
However, if there is a reasonable cause of such failure, no fees shall be levied under section 271B. As proposed in Budget 2026 this will now be treated as a fee and not penalty.
So far, the reasonable causes that are accepted by Tribunals/Courts for delay in filing tax audit reports are:
- Natural Calamities
- Resignation of the Tax Auditor and Consequent Delay
- Resignation of Accountant/key employees.
- Labour problems such as strikes, lock-outs for an extended period
- Loss of Accounts because of situations beyond the control of the Assesses
- Physical inability or death of the partner in charge of the accounts
Important FAQs
What is an income tax audit under Section 44AB?
Tax audit under section 44AB is an audit conducted by a chartered accountant to verify the books of accounts and other documents of the assessee. It is applicable to individuals, HUFs, firms, etc. with gross receipts exceeding Rs 1 crore in business or Rs 50 lakhs in profession. The purpose is to authenticate the accounts, verify compliance with income tax provisions, and submit a tax audit report with the Income Tax Return.
What is the last date for the income tax audit?
The last date for filing the income tax audit for the FY 2025-26 is 30th September 2026.
What documents are audited under Section 44AB?
The CA audits the books of accounts like the cash book, ledger, journals, bank statements, stock records, and sales/purchase invoices. Authenticates the state of affairs of business as on the last date of the financial year.
What are the consequences of not getting a tax audit done?
If a tax audit is applicable but not conducted, it attracts penal consequences under Section 271B. The Assessing Officer can levy a penalty of Rs 1.5 lakh or 0.5% of turnover, which is lower. Prosecution can also be initiated. Non-submission of audit reports makes the return defective, and provisions for faulty returns apply.
Can a salaried individual be subject to a tax audit?
Tax audits for salaried persons are generally not subject to a tax audit. However, if one has income from any other source, like professional fees exceeding Rs 50 lakhs or business income exceeding Rs 1 crore, then in that case tax audit may be applicable. Having turnover/gross receipts from business/profession exceeding the limits makes one liable for a tax audit.
What is Form 3CA-3CD?
Form 3CA is the tax audit report filed by the Chartered Accountant. It certifies that the audit was conducted as per the provisions of Section 44AB. Form 3CD is the statement of particulars in a prescribed format that needs to be submitted along with the Return and Form 3CA. It provides details of deductions claimed, compliance, etc.
Who can conduct a tax audit under Section 44AB?
Only a Chartered Accountant holding a valid Certificate of Practice (COP) can conduct a tax audit as per Section 44AB as per Section 288(2).
If a person is required to get its account audited under any other law, then is it compulsory to get the accounts audited under Section 44AB also?
As mentioned above, the taxpayer need not get his accounts audited again for income tax purposes. It is sufficient if accounts are audited under such other law before the due date of filing the return. The taxpayer can furnish this prescribed audit report under Income tax law.
What is the turnover limit for the applicability of income tax audits to businesses?
Turnover limit for applicability of tax audits to businesses is Rs. 1 crore. However, the limit should be increased to Rs. 10 crores if the cash receipts / cash payments does not exceed 5% of the total receipts / total payments.
What is the due date for furnishing of tax audit report in case of applicability of transfer pricing report u/s92E?
In that case, the due date for furnishing tax audit report is 31st October of the Assessment year.