What is a tax audit under section 44AB?
Reviewed by Ranga & Company
Tax audit: A tax audit is an audit of a business's or professional's accounts under section 44AB of the Income-tax Act, required above set turnover or receipt limits, with a report filed by a practising CA.
At a glance
- Section
- 44AB of the 1961 Act
- Business limit
- Turnover above ₹1 crore (₹10 crore if cash receipts and payments are each ≤ 5%)
- Profession limit
- Receipts above ₹50 lakh (₹75 lakh if cash receipts ≤ 5%)
- Forms
- 3CA or 3CB, with 3CD
- Due date, AY 2026-27
- 21 October 2026 (extended from 30 September)
- Penalty
- 0.5% of turnover, up to ₹1.5 lakh
Presumptive cases
A tax audit can also apply when someone under 44AD declares profit below 8% (6% for digital receipts) and their income exceeds the basic exemption limit, or opts out of presumptive taxation within the lock-in period.
What the auditor checks (Form 3CD)
- Books of account and method of accounting
- TDS compliance and disallowances
- Cash payments above limits and loans in cash
- Payments to related parties and to MSMEs (section 43B(h))
- GST turnover reconciliation
Common mistakes
- Missing the cash-receipts test that raises the limit to ₹10 crore
- Filing the ITR before the audit report is uploaded and accepted
Frequently asked questions
What is the tax audit limit for FY 2025-26?
₹1 crore of turnover for businesses (₹10 crore if cash receipts and payments are each within 5%) and ₹50 lakh of receipts for professionals (₹75 lakh if cash receipts are within 5%).
What is the tax audit due date for AY 2026-27?
CBDT extended it to 21 October 2026, with the ITR for audit cases due by 21 November 2026.
What is the penalty for not getting a tax audit?
0.5% of turnover or gross receipts, up to ₹1.5 lakh, under section 271B.
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