Tax Audit Services in India Under Section 44AB & Section 63
Professional tax audit assistance for businesses, professionals, proprietors, firms and other taxpayers. Understand tax audit applicability, turnover limits, presumptive taxation, Form 3CA/3CB-3CD and the transition to Form 26 under the Income-tax Act, 2025.
caindelhincr provides CA-led tax audit support, review of books and tax particulars, audit reporting and connected income-tax compliance. We help clients understand the applicable law for the relevant financial year or tax year before the audit process begins.
Serving businesses in Delhi NCR, Noida and Bengaluru, and considering suitable engagements in other Indian business centres subject to scope, professional eligibility and audit logistics.
A tax audit is an examination of specified books of account and tax-related particulars of a person carrying on business or profession. It is required when the conditions prescribed under the Income-tax Act are met. The purpose is to facilitate verification of accounting records and prescribed tax disclosures and to support accurate income-tax reporting.
Tax audit applicability is not decided only by looking at turnover. The nature of activity, cash receipts and payments, presumptive taxation history, income declared, type of assessee and the relevant law for the year must also be considered. The law has also transitioned from the Income-tax Act, 1961 to the Income-tax Act, 2025 from 1 April 2026. This page explains both regimes so that taxpayers can identify the correct provisions and forms.
What Is Tax Audit Under the Income-tax Act?
Under the earlier law, Section 44AB of the Income-tax Act, 1961 required specified persons carrying on business or profession to get their accounts audited by an accountant and furnish the audit report by the prescribed date. The corresponding provision under the Income-tax Act, 2025 is Section 63.
A tax audit is distinct from a statutory audit under the Companies Act, 2013. A company may require a statutory audit under company law and may separately be liable for a tax audit under income-tax law. Where accounts are already audited under another law, the tax audit reporting requirements still need to be complied with in the prescribed manner.
Turnover & Receipts Review
Assess business turnover, gross receipts, cash transaction percentages and the applicable audit threshold.
Professional Gross Receipts
Review professional receipts, books of account, presumptive taxation eligibility and tax audit conditions.
Tax Audit Report
Examine prescribed particulars, tax adjustments, TDS/TCS, statutory payments and disclosures for the relevant year.
Who Is Required to Get a Tax Audit?
The principal tax audit thresholds under Section 44AB and corresponding Section 63 are set out below. The thresholds have not been changed merely because the new Act came into force. The specific conditions and presumptive-taxation provisions must also be examined.
| Category | Tax audit threshold / condition | Relevant provision |
|---|---|---|
| Person carrying on business | Total sales, turnover or gross receipts exceed ₹1 crore in the year. | Section 44AB(a) / Section 63(1) |
| Business with low cash transactions | Threshold is increased to ₹10 crore where cash receipts do not exceed 5% of aggregate receipts and cash payments do not exceed 5% of aggregate payments. | Section 44AB(a) proviso / Section 63(1) Table |
| Person carrying on profession | Gross receipts exceed ₹50 lakh in the year. | Section 44AB(b) / Section 63(1) |
| Presumptive taxation cases | Audit may apply where the taxpayer declares profits lower than the prescribed presumptive amount and the specific statutory conditions are met. | Relevant presumptive provisions read with Section 44AB / Section 63 |
Tax Audit for Businesses: ₹1 Crore or ₹10 Crore Limit
For a business, the general tax audit threshold is turnover or gross receipts exceeding ₹1 crore. The threshold is enhanced to ₹10 crore only if both of the following conditions are satisfied:
- Aggregate cash receipts during the year, including amounts received against sales, turnover or gross receipts, do not exceed 5% of total receipts.
- Aggregate cash payments during the year, including payments for expenditure, do not exceed 5% of total payments.
Accordingly, a business with turnover of ₹6 crore may fall outside the general audit threshold if both cash conditions are satisfied. If either cash condition is breached, the enhanced threshold may not be available and the ₹1 crore threshold needs to be considered.
Receipts and payments should be analysed from complete books and bank/cash records. The review should not be limited to sales collections and operating expenses; other receipts and payments may also be relevant under the statutory wording.
Tax Audit for Professionals: ₹50 Lakh and ₹75 Lakh Presumptive Limit
For persons carrying on specified professions, tax audit is generally required where gross professional receipts exceed ₹50 lakh. Separately, Section 44ADA provides a presumptive taxation option to eligible resident individuals and partnership firms (other than LLPs) carrying on specified professions.
The presumptive receipts ceiling under Section 44ADA is ₹50 lakh, enhanced to ₹75 lakh where cash receipts do not exceed 5% of total gross receipts. The enhanced ₹75 lakh threshold is a presumptive taxation eligibility limit; it should not be confused with the general tax audit threshold of ₹50 lakh under Section 44AB(b).
Example: Professional receipts
A qualifying professional has gross receipts of ₹68 lakh, with cash receipts within the prescribed 5% condition. The professional may be within the ₹75 lakh presumptive ceiling under Section 44ADA, subject to all eligibility conditions. If the professional does not opt for presumptive taxation or declares income below the prescribed presumptive amount, the audit implications must be evaluated under the specific provisions.
Presumptive Taxation & Tax Audit: Sections 44AD, 44ADA and 44AE
Presumptive taxation schemes allow eligible taxpayers to declare income at prescribed rates or amounts instead of computing taxable business or professional profits through the regular detailed method. However, opting for a presumptive scheme does not automatically remove every record-keeping or tax audit obligation. The taxpayer’s eligibility, declared income and history of opting in or out need to be reviewed.
Eligible Small Businesses
For eligible businesses, the turnover ceiling is generally ₹2 crore and is enhanced to ₹3 crore where cash receipts do not exceed 5% of total turnover or gross receipts, subject to statutory conditions.
Specified Professionals
Presumptive income is generally 50% of eligible gross receipts. The ceiling is ₹50 lakh, enhanced to ₹75 lakh where cash receipts do not exceed 5% of total gross receipts.
Goods Carriage Business
Presumptive income rules apply to eligible taxpayers engaged in plying, hiring or leasing goods carriages, subject to vehicle and other statutory conditions.
Under the 1961 Act, audit consequences for taxpayers declaring income below presumptive amounts are governed by the relevant provisions, including Section 44AD(5), Section 44ADA(4), Section 44AE and Section 44AB. The new Act reorganises the corresponding provisions; Section 63 specifically refers to cases covered by the relevant presumptive provisions in Sections 58(2) and 61(2), as set out in its table.
Income-tax Act, 2025: Tax Audit Under Section 63
The Income-tax Act, 2025 received Presidential assent on 21 August 2025 and came into force from 1 April 2026. The Income-tax Rules, 2026 and the corresponding new forms were also notified to operationalise the new law. The new Act reorganises and simplifies the legislation while retaining the principal tax audit thresholds.
| Earlier law | New law | Subject |
|---|---|---|
| Section 44AB | Section 63 | Audit of accounts of persons carrying on business or profession |
| Rule 6G | Rule 47 | Prescribed audit report and particulars |
| Forms 3CA / 3CB / 3CD | Form 26 | Tax audit report and statement of particulars |
| Previous year / assessment year framework | Tax year framework | Terminology and tax-period structure under the new Act |
Section 63 requires a person carrying on business or profession who satisfies the prescribed conditions to get the accounts of the tax year audited by an accountant before the specified date. It retains the ₹1 crore business threshold, the ₹10 crore enhanced threshold subject to both 5% cash tests, the ₹50 lakh professional threshold and audit consequences in specified presumptive-taxation cases.
Section 63 also addresses cases where accounts are required to be audited under another law. In such cases, the audit under that other law and the prescribed tax audit report requirements must be completed and furnished in the manner set out in the new provision.
Official reference: Income-tax Act, 2025 – Section 63 and Income-tax Act, 2025 and Rules, 2026 portal.
New Tax Audit Form 26: Replacing Forms 3CA, 3CB and 3CD
For tax years commencing on or after 1 April 2026, the tax audit report is furnished in the unified Form 26 prescribed under Rule 47 of the Income-tax Rules, 2026. Form 26 consolidates the earlier Forms 3CA, 3CB and 3CD into a single structured report.
For FY 2025–26 / AY 2026–27
The old Income-tax Act, 1961 applies. Use Form 3CA where accounts are audited under another law, or Form 3CB in other cases, together with Form 3CD. Follow the applicable due date and portal process for the year.
For Tax Year 2026–27 onwards
The Income-tax Act, 2025 applies. Section 63 read with Rule 47 prescribes Form 26. The unified form combines the audit report and statement of tax particulars.
What is included in Form 26?
The new form is structured into parts and schedules covering general information, books of account and accounting method, receipts and income, expenses, prior-period items, losses and depreciation, international taxation, other key parameters, TDS/TCS, indirect taxation and quantitative details. The auditor also reports on the financial statements and relevant tax particulars as required by the form.
Form 26 is not simply a renamed Form 3CD. Taxpayers and tax auditors should study the new form, Rule 47, instructions and the Income Tax Department’s guidance before preparing the report.
Official references: Form 26 FAQs | Guidance Note on Form 26.
Which Tax Audit Form Applies to Your Financial Year?
| Period | Applicable law | Audit form | Reporting date |
|---|---|---|---|
| FY 2025–26 / AY 2026–27 | Income-tax Act, 1961 | Form 3CA or 3CB with Form 3CD | 30 September 2026, subject to any applicable extension or special category deadline |
| Tax Year 2026–27 | Income-tax Act, 2025 | Form 26 under Section 63 read with Rule 47 | 30 September 2027, based on the corresponding return due-date framework, subject to applicable law/extension |
What Does a Tax Auditor Examine?
The tax auditor examines the books of account and verifies particulars required to be reported under the applicable audit form. The exact audit procedures and reporting depend on the taxpayer’s activity, accounting records, tax positions and applicable clauses.
Books of Account
Cash book, bank book, general ledger, journal, trial balance, invoices, vouchers and accounting method.
Turnover & Receipts
Sales, service income, gross receipts, advances, credit notes, turnover reconciliation and quantitative details.
Expenses & Disallowances
Business expenditure, capital and personal expenses, statutory disallowances, provisions and prior-period items.
Loans & Specified Transactions
Loans, deposits, repayments and compliance with applicable provisions governing specified modes and transactions.
TDS, TCS & Statutory Payments
Tax deduction and collection, deposits, return reconciliation, GST and other applicable statutory dues.
Depreciation & Tax Computation
Fixed assets, depreciation schedules, tax adjustments, losses, deductions and reconciliation with the return.
Tax Audit for Companies, Firms, Proprietors and Professionals
Tax audit requirements can apply to different types of taxpayers. The audit test must be applied to the person carrying on the business or profession and the relevant tax year.
- Private Limited and Public Limited Companies: Tax audit under income-tax law may apply in addition to statutory audit under the Companies Act.
- Partnership Firms and LLPs: Tax audit is determined under income-tax provisions; LLP status does not automatically exempt an assessee from tax audit.
- Proprietorship Businesses: Turnover, cash receipt/payment ratios and presumptive taxation history are key factors.
- Professionals: Gross receipts, eligible profession, presumptive taxation and declared profit require review.
- Traders and Investors: F&O, intraday and other business income may require turnover computation and audit applicability analysis based on the nature of transactions and applicable guidance.
For businesses, tax audit may also need to be coordinated with statutory audit, GST reconciliation, TDS compliance and financial statement finalisation.
Tax Audit for F&O, Intraday and Share Market Traders
Tax audit applicability for share market traders should not be decided only by comparing the broker’s contract-note value or total trade value with the turnover threshold. For derivatives and intraday transactions, tax turnover needs to be computed using the applicable principles, including the treatment of favourable and unfavourable differences and other relevant items.
- Review broker tax P&L, ledger, contract notes and trade summary.
- Determine the nature of income: business income, capital gains or other applicable classification.
- Compute turnover in accordance with applicable tax audit guidance.
- Review brought-forward losses, speculative and non-speculative classifications and set-off requirements.
- Assess books of account, presumptive provisions where relevant and tax audit applicability.
Read our dedicated ITR and audit services for F&O and stock market traders page.
Tax Audit Due Date and Filing Process
Under the old law, the tax audit report is generally required to be obtained and furnished by the specified date, ordinarily one month before the due date for furnishing the return under Section 139(1). The Income Tax Department’s current guidance states 30 September of the relevant assessment year for a regular tax audit, subject to special cases and any notified extension. Transfer pricing cases have a different return timeline and related audit-report schedule.
Under Section 63 of the Income-tax Act, 2025, the specified date is similarly linked to one month before the due date for furnishing the return under Section 263(1). Always check the relevant taxpayer category, tax year, return due date and any CBDT notification before relying on a calendar date.
Applicability Review
Analyse turnover, gross receipts, cash ratios, presumptive scheme and prior-year history.
Books & Reconciliation
Review ledgers, bank, sales, expenses, GST, TDS and supporting schedules.
Audit & Reporting
Perform audit procedures and prepare the applicable Form 3CA/3CB-3CD or Form 26.
Upload & Approval
File the report electronically and ensure the assessee completes the required acceptance/approval process.
Penalty for Failure to Get Accounts Audited
Under Section 271B of the Income-tax Act, 1961, failure to get accounts audited or furnish the audit report as required under Section 44AB may attract a penalty equal to 0.5% of total sales, turnover or gross receipts, subject to a maximum of ₹1,50,000.
Section 273B provides that penalty may not be imposed where the taxpayer proves reasonable cause for the failure. Whether reasonable cause exists depends on the facts, evidence and circumstances of the case. A penalty is not automatic merely because an audit report was filed late; the relevant statutory conditions and explanation must be examined.
For tax years governed by the Income-tax Act, 2025, the corresponding penalty and reasonable-cause provisions should be checked in the new Act rather than mechanically quoting the old section numbers.
Documents Required for Tax Audit
Basic & Registration Details
- PAN, Aadhaar and taxpayer constitution details.
- GST registration and other applicable licences.
- Previous year ITR, tax audit report and computation.
- Details of branches, business locations and activities.
Books & Financial Records
- Trial balance, general ledger and cash/bank books.
- Sales and purchase registers and invoices.
- Bank statements and bank reconciliations.
- Fixed asset register and depreciation workings.
Tax & Compliance Records
- GST returns and reconciliation statements.
- TDS/TCS returns, challans and ledgers.
- Advance tax and self-assessment tax details.
- Details of statutory dues and outstanding demands.
Specific Business Information
- Loan, deposit and repayment details.
- Related-party transactions and specified payments.
- Inventory and quantitative records, where relevant.
- Broker statements and trade reports for F&O cases.
Tax Audit Services Across Major Cities in India
N C Agrawal & Associates works with businesses and professionals in Delhi NCR, Noida and Bengaluru, and considers suitable tax audit engagements from other major business and financial centres in India. Audit acceptance and delivery depend on the nature of business, records, location, audit scope, professional eligibility and on-site requirements.
We also invite enquiries from Mumbai, Pune, Chennai, Ahmedabad, Kolkata, Gurugram, Jaipur, Kochi, Indore, Chandigarh and other commercial centres. These are service enquiry locations, not a claim of physical branch offices in each city.
Related Income Tax, Audit & Business Compliance Services
Why Choose N C Agrawal & Associates for Tax Audit?
CA-Led Professional Review
Professional leadership by CA Neeraj Bansal (FCA, B.Com), with experience in taxation, audit and tax litigation.
Correct Year-Specific Law
We distinguish between the old Act and the new Act so the correct audit provision, form and reporting period are considered.
Practical Compliance Support
Clear communication on documents, reconciliations, tax observations, filing steps and connected compliance matters.
Every engagement is subject to professional eligibility, independence, conflict checks, availability and agreed scope. The audit conclusion depends on audit evidence and applicable law; no particular result or acceptance by the tax department can be guaranteed.
Frequently Asked Questions on Tax Audit
1. What is the tax audit turnover limit for business?
The general business threshold is turnover or gross receipts exceeding ₹1 crore. It is increased to ₹10 crore if both cash receipts and cash payments do not exceed 5% of their respective aggregate amounts.
2. What is the tax audit limit for professionals?
The general tax audit threshold for a profession is gross receipts exceeding ₹50 lakh. Section 44ADA has a separate presumptive taxation ceiling of ₹50 lakh, enhanced to ₹75 lakh where cash receipts do not exceed 5% of total gross receipts, subject to eligibility.
3. Is tax audit compulsory if turnover is below ₹1 crore?
Not necessarily under the general business turnover test, but presumptive taxation history and other statutory conditions may trigger an audit requirement. Review the complete facts before concluding.
4. Is tax audit applicable to a company even if statutory audit has been completed?
It may be. Statutory audit under the Companies Act and tax audit under income-tax law are separate obligations. If the tax audit conditions are met, the prescribed tax audit reporting must also be completed.
5. What is the difference between Form 3CA and Form 3CB?
Under the old law, Form 3CA is used where the accounts are required to be audited under another law. Form 3CB is used in other cases. Form 3CD contains the prescribed statement of particulars.
6. What is Form 26 under the Income-tax Act, 2025?
Form 26 is the unified tax audit report and statement of particulars prescribed under Section 63 read with Rule 47 of the Income-tax Rules, 2026. It replaces the earlier Forms 3CA, 3CB and 3CD for tax years beginning on or after 1 April 2026.
7. Which form applies for FY 2025–26 / AY 2026–27?
For FY 2025–26 / AY 2026–27, the old Income-tax Act, 1961 applies. The tax audit report is filed in Form 3CA or 3CB, as applicable, together with Form 3CD.
8. Has the tax audit threshold changed under the Income-tax Act, 2025?
The principal thresholds remain the same: ₹1 crore for business, enhanced to ₹10 crore where both cash tests are satisfied, and ₹50 lakh for profession. Presumptive taxation provisions and eligibility must also be reviewed.
9. What is the due date for tax audit?
The regular tax audit report due date is generally 30 September of the relevant assessment year under the current official guidance, subject to special categories and CBDT extensions. Under the new Act, the specified date is linked to one month before the applicable return due date.
10. What is the penalty for not getting a tax audit done?
Under Section 271B of the 1961 Act, penalty may be the lower of 0.5% of turnover or gross receipts and ₹1,50,000. Section 273B provides relief where reasonable cause is proved. For new-law tax years, check the corresponding provisions of the 2025 Act.
11. Is tax audit applicable to F&O traders?
It may be, depending on the correctly computed turnover, business classification, books and other conditions. Broker turnover or contract value should not be used blindly as tax audit turnover.
12. Can an LLP be subject to tax audit?
Yes. LLPs are not subject to statutory audit under the Companies Act, but an LLP carrying on business or profession can still be liable for tax audit under the Income-tax Act if the relevant conditions are met.
13. Who can conduct a tax audit?
A tax audit must be conducted by an accountant as defined under the applicable income-tax law, generally a Chartered Accountant in practice, subject to professional eligibility, independence and appointment requirements.
14. Does the taxpayer need to approve the tax audit report?
Under the e-filing process, the CA uploads the applicable report and the taxpayer is required to accept or approve it through the taxpayer’s e-filing account. The applicable portal workflow should be followed for the relevant form and year.
15. Do you provide tax audit services outside Delhi NCR?
We consider suitable assignments from Bengaluru and other Indian business centres, subject to professional eligibility, scope, location, on-site requirements and team availability. Contact us with your business details for an initial discussion.
Need a Tax Audit for Your Business or Profession?
Share your business activity, turnover or gross receipts, cash transaction percentage, presumptive taxation history and relevant financial year or tax year. Our team can review the audit applicability and explain the required forms, documents, timeline and professional fee.
Email: info@caindelhincr.in
Legal note: This page is for general information and professional service enquiries. Tax audit applicability, reporting particulars, forms and due dates must be determined with reference to the law, rules, notifications and facts applicable to the relevant financial year or tax year. Always verify current CBDT instructions and portal requirements before filing.