A tax audit under section 44AB is not about wrongdoing — it is a threshold requirement. Cross certain turnover or profit limits and a chartered accountant must audit your accounts and file the report. This guide sets out exactly who is covered, the Rs 1 crore vs Rs 10 crore distinction, the forms, the deadline, and the penalty for missing it.
- Business turnover above Rs 1 crore (or Rs 10 crore if cash is within 5%) triggers audit.
- Professionals cross the line at Rs 50 lakh gross receipts.
- The auditor files Form 3CA/3CB with 3CD; the report is due by 30 September.
- Missing a required audit attracts a penalty under section 271B — up to 0.5% of turnover.
Tax audit thresholds
| Category | Threshold | Condition |
|---|---|---|
| Business (mostly cash) | Rs 1 crore | Cash receipts/payments above 5% |
| Business (mostly digital) | Rs 10 crore | Cash within 5% of transactions |
| Profession | Rs 50 lakh | Gross receipts |
| Presumptive opt-out | Below presumptive rate | Income above basic exemption |
Who needs a tax audit
- Business: turnover above Rs 1 crore (raised to Rs 10 crore where cash transactions are within 5%).
- Profession: gross receipts above Rs 50 lakh.
- Presumptive cases: where you declare lower profits than the presumptive rate and your income exceeds the basic exemption limit.
The forms and deadline
The auditor files Form 3CA (where accounts are already audited under another law) or Form 3CB (otherwise), along with the detailed statement of particulars in Form 3CD. The audit report is generally due by 30 September, with the income tax return following by 31 October for audited taxpayers.
“A tax audit is a line, not a judgement. The only mistake is crossing it without knowing — and filing late as a result.”
Frequently asked questions
Does the Rs 10 crore limit apply to me?
Only if both your cash receipts and cash payments are within 5% of the total. Miss that condition and the Rs 1 crore limit applies instead.
Is a tax audit the same as a GST audit or statutory audit?
No. A tax audit is under the Income Tax Act. A statutory audit is under the Companies Act, and GST reconciliation (GSTR-9C) is under GST law. A business can be subject to more than one.
Can presumptive taxpayers avoid audit?
Yes — declaring income at or above the presumptive rate under 44AD/44ADA generally avoids audit. Declaring lower profits (and exceeding the exemption limit) brings it back. See our presumptive taxation guide.
Our tax audit service handles the audit and both filings. See all income tax services.
