Tax Audit Under Section 44AB: Limits, Forms and Due Dates

A tax audit is an examination of your books of account by a Chartered Accountant, who reports in a prescribed format whether your income has been computed correctly under the Income-tax Act. It is required under section 44AB of the 1961 Act, which becomes section 63 of the Income-tax Act, 2025 from tax year 2026-27. It applies only when your turnover or receipts cross specified limits, or in some presumptive taxation cases.

Who needs a tax audit?

Taxpayer	Audit required if…
Business (general)	Turnover/sales/gross receipts above ₹1 crore
Business with mostly digital transactions	Limit rises to ₹10 crore if cash receipts and cash payments are each not more than 5% of the totals
Profession (doctors, lawyers, architects, CAs, consultants, designers…)	Gross receipts above ₹50 lakh
Profession under presumptive scheme (44ADA)	Opting out and declaring less than 50% profit, with income above the basic exemption limit
Business under presumptive scheme (44AD)	Declaring profit below 6%/8% with income above the exemption limit, or having opted out of 44AD within the past 5 years. The ₹1 crore / ₹10 crore test still applies
Transporters under 44AE, and certain non-resident presumptive schemes	Declaring lower profit than the presumptive rate

Note on professionals: the presumptive scheme under 44ADA is available up to ₹75 lakh of receipts where cash receipts are within 5%. But the audit limit for professionals in section 44AB remains ₹50 lakh for those not using 44ADA. Check your case carefully.

F&O traders: turnover for F&O is the absolute sum of profits and losses (as per the ICAI Guidance Note), not the contract value. Many traders fall well below ₹10 crore and need an audit only in specific loss or low-profit presumptive cases.

The audit report: Form 3CA / 3CB / 3CD, then Form 26

Form	Used when
Form 3CA	The person is already required to get accounts audited under another law (e.g. a company under the Companies Act)
Form 3CB	No other audit applies (proprietors, firms not covered elsewhere)
Form 3CD	The statement of particulars (the detailed annexure with about 44 clauses) attached to either

For tax year 2026-27 onward, under the Income-tax Rules, 2026, these are replaced by a single Form 26. The FY 2025-26 audits being done in 2026 still use 3CA/3CB/3CD.

Key points reported in Form 3CD

Method of accounting and stock valuation, and changes to them
Depreciation as per the Income-tax Act
Section 43B items (e.g. statutory dues, bonus, leave encashment) paid after the year-end, and payments to MSMEs beyond 45 days (section 43B(h))
TDS compliance: payments where TDS wasn’t deducted or deposited, and late returns
Cash payments above ₹10,000 in a day to one person (disallowed under 40A(3))
Cash loans or deposits taken or repaid above ₹20,000 (sections 269SS and 269T)
Related-party payments (section 40A(2)(b))
GST turnover reconciliation and the break-up of expenditure into GST-registered and unregistered entities
Quantitative details of goods traded or manufactured
Brought-forward losses, deemed income, and more

The auditor uploads the report on the e-filing portal, and you approve it from your login.

Due dates

Report / return	FY 2025-26 (AY 2026-27)
Tax audit report	30 September each year by law. For AY 2026-27, extended by CBDT to 21 October 2026
ITR for audit cases	31 October by law. For AY 2026-27, extended to 21 November 2026
Transfer pricing cases (Form 3CEB)	31 October / ITR 30 November

Penalty for not getting a tax audit

Under section 271B of the 1961 Act, 0.5% of turnover or gross receipts, up to ₹1,50,000. No penalty applies if you show a reasonable cause (section 273B). Under the 2025 Act this is reported to become a fee in section 428.

Not getting an audit also means your ITR may be treated as defective (section 139(9)).

How to prepare for a smooth audit

Close the books properly: bank reconciliations, ledger scrutiny and stock valuation.
Reconcile GST returns with the books, and the AIS/Form 26AS with income recorded.
Keep a TDS working: vendor-wise payments, TDS deducted and deposited, and returns filed.
List cash transactions above ₹10,000 and loans or deposits above ₹20,000.
Prepare MSME vendor dues with Udyam numbers and payment dates.
Share the fixed asset register with additions and dates of use.
Finalise at least a month before the due date. Last-minute audits produce qualified reports.

Frequently asked questions

My business turnover is ₹2 crore, all received through the bank. Do I need an audit?
If both cash receipts and cash payments are each within 5% of the totals, your limit is ₹10 crore, so no audit is needed at ₹2 crore.

I’m a freelancer with ₹60 lakh receipts. Do I need a tax audit?
If you opt for 44ADA and declare at least 50% profit (with cash receipts within 5%), no. If you keep regular books and declare actual profit, receipts above ₹50 lakh mean an audit is required.

Who can conduct a tax audit?
Only a practising Chartered Accountant, subject to the ICAI limit of 60 tax audits per CA per year.

Need a tax audit or want to know if one applies? Garvita Jain & Co. conducts tax audits for businesses and professionals, prepares the reconciliations behind Form 3CD, and files your ITR on time. Contact us here, or at contact@garvitajainandco.com or +91 98678 16597.

This article is general information based on the law as of November 2026 and is not professional advice.

Sources

Official

Professional / CA publications

Tax Audit: Who Needs It, Turnover Limits and Key Reporting Points