Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961 (Revised 2025)
What is an Audit?
1.1 The term “audit” generally refers to processes such as checking, reviewing, or inspecting. Various laws outline different types of audits; for instance, company law necessitates a company audit, while cost accounting law mandates a cost audit.
Tax Audit
1.2 Under the Income-tax law, businesses and professionals must have their accounts audited to comply with these regulations. Section 44AB specifies which taxpayers are obliged to have their accounts audited by a chartered accountant. This audit aims to ensure adherence to the Income-tax law and fulfillment of other legal requirements. The audit performed by the chartered accountant to meet the needs of section 44AB is known as a tax audit.
1.3 The chartered accountant conducting the tax audit must present their findings and observations in Forms 3CA and 3CB. The audit report should be submitted using Form Nos. 3CA/3CB, alongside a statement of particulars provided in Form 3CD.
What is the Objective of the Tax Audit?
1.4 A primary objective of the tax audit is to identify the requirements of Form No. 3CD and report these in Forms 3CA and 3CB. In addition to fulfilling reporting mandates, a tax audit ensures that the books of account and related records are accurately maintained and reflect the true and correct details specified in Form No. 3CD. This process can also streamline tax law administration by presenting well-organized accounts to tax authorities, significantly reducing the time Assessing Officers spend on routine verifications, such as checking the accuracy of totals and verifying other details.
Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961 (Revised 2025) Download