CA for Income Tax Audit –
Section 44AB Tax Audit Services for Businesses & Professionals in India
A tax audit under Section 44AB is a statutory obligation — not optional. Businesses above ₹1 crore and professionals above ₹75 lakh must get their accounts audited by a CA. Missing it attracts a penalty of 0.5% of turnover up to ₹1.5 lakh under Section 271B — plus loss of the right to carry forward business losses.
Overview
What Is an Income Tax Audit Under Section 44AB?
An income tax audit — also called a tax audit or statutory audit under income tax — is an independent examination of a taxpayer's books of accounts by a qualified Chartered Accountant. The purpose is to verify that income, expenses, deductions, and tax calculations are correctly reported and comply with the Income Tax Act. Moreover, it ensures that the financial records actually support the figures in the filed Income Tax Return.
The CA for income tax audit does not merely check arithmetic. They verify the nature and genuineness of transactions, check TDS compliance on payments, review disallowable expenditure, examine related party transactions, and certify dozens of specific disclosures in Form 3CD. N D Savla & Associates provides professional income tax audit services for businesses, professionals, LLPs, partnerships, and companies across India — with our Audit & Assurance practice covering tax audit, GST audit, internal audit, and statutory audit under multiple laws.
Section 44AB — Applicability
Who Is Required to Get an Income Tax Audit? — Turnover Limits FY 2025-26
Section 44AB specifies the categories of taxpayers who must get a tax audit done. The applicability depends on the type of taxpayer and the turnover or gross receipts for the financial year. Our Audit Under Income Tax Act page covers the full scope of audit obligations.
| Category of Taxpayer | Standard Threshold | Digital Transaction Threshold | Applicable Section |
|---|---|---|---|
| Business (trader, manufacturer, contractor) | Turnover > ₹1 crore | Turnover > ₹10 crore (if 95%+ transactions digital) | Section 44AB(a) |
| Professional (doctor, lawyer, architect, engineer, CA, etc.) | Gross receipts > ₹75 lakh | No separate digital threshold — ₹75 lakh applies | Section 44AB(b) |
| Business opting out of presumptive scheme (Section 44AD) but declaring income below 8%/6% | Any turnover — mandatory if opting out | Digital threshold not relevant | Section 44AB(d) |
| Professional opting for Section 44ADA but declaring income below 50% | Gross receipts > ₹75 lakh | Digital threshold not relevant | Section 44AB(e) |
| Company or LLP (regardless of presumptive taxation) | Always mandatory above threshold | ₹10 crore digital threshold for 44AB(a); Companies Act audit is separate | Section 44AB(a) |
| Important note FY 2025-26: The digital transaction threshold (₹10 crore) applies only when the aggregate of all cash receipts does not exceed 5% of total receipts AND all cash payments do not exceed 5% of total payments. Both conditions must be satisfied simultaneously. | |||
Tax Audit Report Forms
Form 3CA, Form 3CB and Form 3CD — Explained
After completing the income tax audit, the CA submits the report using prescribed forms. Understanding which form applies is important — each has a different scope and applicability.
Form 3CA
Form 3CA applies when the taxpayer is already required to get accounts audited under any other statute — for example, the Companies Act 2013 (statutory audit) or the LLP Act. The CA for income tax audit certifies that the accounts were audited under that other law and submits the tax-specific particulars in Form 3CD. Companies always use Form 3CA because they have a mandatory statutory audit under the Companies Act.
Form 3CB
Form 3CB applies when the taxpayer is not required to audit accounts under any other law. This is typical for sole proprietors, partnership firms, and professionals who cross the Section 44AB threshold but do not have a statutory audit obligation elsewhere. Here, the tax auditor independently audits and certifies the accounts using Form 3CB, along with the detailed particulars in Form 3CD.
Form 3CD
Form 3CD is a detailed statement of particulars containing 44 clauses covering the nature of the business, accounting method, TDS compliance, payments to related parties, capital expenditure, prior period items, disallowable expenses, MSME payment delays, speculative transactions, and many other statutory disclosures. Every clause must be independently verified by the CA before the report is digitally signed and uploaded to the Income Tax portal. Errors in Form 3CD are a common source of scrutiny notices.
What to Provide
Documents Required for Income Tax Audit
Providing complete and organised documentation to the CA for income tax audit is the single most important step a business can take to ensure an efficient audit. Incomplete records delay the process and increase the risk of incorrect disclosures in Form 3CD.
| Document Category | Specific Documents | Why It Is Needed in Tax Audit |
|---|---|---|
| Books of Accounts | Cash book, ledger, journal, day book, petty cash book, purchase and sales registers | Core audit requirement under Section 44AA. Verified for completeness, correctness, and consistency with financial statements. |
| Financial Statements | Trading account, P&L account, Balance Sheet — current and previous year | Forms the basis of income computation. CA verifies that P&L correctly reflects all income and disallowable expenses. |
| Bank Records | Bank statements for all accounts (current, savings, OD, CC), bank reconciliation statements | Identifies unreported income, unexplained credits, and ensures cash receipts and payments are within permissible limits. |
| Sales & Purchase | GST invoices (sales and purchases), e-way bills, credit and debit notes, import-export documents | Turnover verification and reconciliation with GST returns. Discrepancy between IT return and GST returns is a common audit trigger. |
| TDS Records | Form 26AS, TDS certificates (Form 16/16A), TDS challans, TDS return copies (Form 24Q, 26Q) | Form 3CD requires detailed TDS compliance reporting. Non-compliance leads to disallowance of expenses under Section 40(a)(ia). |
| Expense Vouchers | Bills and invoices for all expenses above ₹50 (cash payments), salary records, rent agreements, professional fee invoices | Supports genuineness of expenditure claims. Cash payments exceeding ₹10,000 per day per person are disallowable under Section 40A(3). |
| Asset Records | Fixed asset register, purchase invoices for assets, depreciation workings, asset disposal records | Depreciation as per Income Tax Act differs from Companies Act. CA recalculates and certifies correct depreciation in Form 3CD. |
| Loan & Borrowing Records | Loan agreements, repayment schedules, interest calculations, MSME payment records, related party transaction details | Interest disallowance provisions and related party disclosures in Form 3CD. MSME delays of over 45 days are specifically reportable. |
| Tax Records | Previous year ITR, advance tax challans, self-assessment tax challan, GST returns (GSTR-1, GSTR-3B, GSTR-9) | Reconciliation of ITR with GST returns is a standard audit step. Advance tax adequacy also reviewed. |
Consequences & Deadlines
Penalty for Not Getting an Income Tax Audit Done
Many businesses assume that a tax audit is optional or that the penalty is trivial. Neither is correct. Section 271B mandates a penalty equal to 0.5% of total turnover or gross receipts, subject to a maximum of ₹1,50,000. But that is only the starting point.
Cascade of Consequences Beyond the Section 271B Penalty
Section 271B penalty: 0.5% of total turnover or gross receipts — maximum ₹1,50,000. Applies when the audit is not conducted or the report is not filed by the due date. See our Section 271B penalty page for the full scope.
Late ITR filing: The tax audit report must be uploaded before the ITR is filed. If the audit is missed, the ITR cannot be filed on time — triggering a late filing fee under Section 234F and interest under Section 234A on unpaid tax.
Permanent loss carry-forward forfeiture: If losses need to be carried forward, they are permanently disallowed if the ITR is filed after the original due date. This is a significant financial cost for businesses with net losses in the year.
Scrutiny and notices: An unfiled or late-filed audit report increases the probability of a scrutiny assessment. For notices arising from audit defaults, our Income Tax Notice Handling service manages the response.
Income Tax Audit Due Dates — FY 2025-26 / AY 2026-27
Form 3CA/3CB + Form 3CD must be uploaded to the Income Tax portal by 30 September 2026. Report must be digitally signed by the CA and accepted by the taxpayer on the portal.
For cases involving international transactions or specified domestic transactions requiring a transfer pricing audit report, the deadline extends to 31 October 2026.
Taxpayers required to get a tax audit must file their Income Tax Return by 31 October 2026 — after the audit report is filed. Starting the audit in May or June ensures sufficient time.
Our Audit Process
Our Income Tax Audit Services — What the CA Does
When you engage N D Savla & Associates as your CA for income tax audit, we take complete ownership of the audit process — from document collection to portal submission.
Pre-Audit Review and Books Verification
TDS Compliance Verification
Form 3CD Preparation and Report Certification
ITR Filing Coordination and Post-Audit Compliance
Who We Serve
Types of Taxpayers We Serve for Income Tax Audit
Our income tax audit practice serves a wide range of businesses and professionals across India.
Businesses & Traders
Manufacturing units, trading houses, contractors, and service providers with turnover above ₹1 crore.
Professionals
Doctors, lawyers, architects, engineers, CAs, and consultants with gross receipts above ₹75 lakh.
Companies
Private limited and public limited companies needing both Companies Act statutory audit and income tax audit.
LLPs & Partnership Firms
Firms crossing the Section 44AB threshold requiring Form 3CB and Form 3CD where no other audit obligation exists.
Presumptive Scheme Opt-Outs
Taxpayers under Section 44AD or 44ADA declaring income below the presumptive rate — mandatorily subject to audit.
Trusts & Charitable Institutions
Entities filing under the trust registration framework with audit requirements covered by our Trust Audit Services.
Complete Audit & Tax Practice
Related Audit and Tax Services
Our complete audit and tax practice covers everything a business needs beyond income tax audit.
Looking for a CA for Income Tax Audit? Get It Done Right — On Time, Every Time.
Section 44AB tax audit · Form 3CA / 3CB / 3CD · Turnover limit assessment · TDS clause verification · Books review · ITR filing for audit cases
+91 98190 00511 | +91 91670 58000 | +91 98190 00445 | nainitsavla@savlagroup.in
Contact UsF.A.Q.
For FY 2025-26, a business must get a tax audit if its total turnover or gross receipts exceed Rs. 1 crore. However, if more than 95% of all receipts and payments are digital, this threshold rises to Rs. 10 crore. For professionals, the threshold is Rs. 75 lakh in gross receipts regardless of digital payment ratio. Additionally, businesses that opt out of the presumptive taxation scheme under Section 44AD and declare income below 8% or 6% must get a tax audit regardless of turnover. We evaluate audit applicability as part of our Income Tax E-Filing service before the audit engagement begins.
Form 3CA is used when the taxpayer is already required to get accounts audited under another law — such as the Companies Act. In this case, the CA certifies that the accounts were audited under that other law. Form 3CB is used when no other audit law applies — the CA independently audits and certifies the accounts. Both are submitted together with Form 3CD, which contains the detailed 44-clause statement of particulars. For companies that need both statutory audit and tax audit, see our Audit under Companies Act service.
Form 3CD is the detailed statement of particulars that accompanies the tax audit report. It contains 44 clauses covering business details, accounting methods, TDS compliance, disallowable payments, depreciation, related party transactions, MSME payment delays, speculative losses, and many other statutory disclosures. Every clause is independently verified by the CA before the report is signed and uploaded. Errors in Form 3CD are a common source of scrutiny notices. Our team ensures each clause is accurately completed and cross-verified against the books. Post-audit notice handling is available through our Income Tax Notice service.
The penalty under Section 271B is 0.5% of total turnover or gross receipts, up to a maximum of Rs. 1,50,000. This applies when a tax audit is required but not conducted, or when the audit report is not filed by the due date. Additionally, late filing of the ITR triggers a fee under Section 234F and interest under Section 234A on unpaid tax. Furthermore, carry forward of business losses is permanently disallowed if the return misses the original due date. Our Section 271B Penalty page explains the full consequences and how we help businesses avoid or contest these penalties.
The tax audit report (Form 3CA/3CB along with Form 3CD) must be uploaded to the Income Tax portal by 30 September 2026 for most taxpayers. For cases involving international or specified domestic transactions requiring a transfer pricing audit report, the deadline is 31 October 2026. The Income Tax Return for audit cases is due on 31 October 2026. We recommend starting the audit process no later than June to allow sufficient time for verification, review, and filing.
