Who needs a tax audit under 44AB?

A tax audit applies to a business where total turnover or gross receipts exceed ₹1 crore — raised to ₹10 crore where cash receipts and cash payments are each 5% or less of the total. For a profession, it applies where gross receipts exceed ₹50 lakh; this is a flat limit, and the digital-receipts relaxation that raises the business threshold does not apply to it. A presumptive taxpayer (Sections 44AD/44ADA) who declares income below the presumptive rate and exceeds the basic exemption limit may also trigger an audit. The exact position for your case is confirmed against your turnover and receipt pattern.

What is the difference between statutory and tax audit?

A statutory audit is required under the Companies Act (or the LLP Act) and examines whether the financial statements give a true and fair view — for every company, regardless of size. A tax audit is required under the Income-tax Act once turnover or receipt thresholds are crossed, and focuses on the particulars the tax law needs (Form 3CD). An entity over the threshold may need both; they serve different laws and produce different reports.

When is a company audit mandatory?

For a company incorporated under the Companies Act, a statutory audit is mandatory every financial year from incorporation onward — there is no turnover or profit threshold below which it is exempt. The first auditor must be appointed within the prescribed period after incorporation.

Can you conduct our audit remotely?

A significant part of audit work — examining ledgers, vouchers and digital records — can be done remotely, with documents shared securely. Some procedures, such as physical stock verification or inspection of original records, may require access to your premises or originals; that part is planned around your location.

Audit & Assurance Services | CA in Bengaluru

This season’s dates

For FY 2025-26 (AY 2026-27): the tax audit report is due 30 September 2026 and the return in audit cases 31 October 2026. Businesses and professionals not liable to audit, filing ITR-3 or ITR-4, have until 31 August 2026 — a permanent change made by the Finance Act 2026 to Section 139(1), replacing the general 31 July date for that category. Which date applies turns on audit liability under Section 44AB, not on the form number. The audit season guide sets out the full calendar, the Section 271B penalty and the records to have ready.

Statutory audit (companies and LLPs)

Under the Companies Act, every company must have its financial statements audited each year by an independent Chartered Accountant — regardless of turnover or profit. LLPs require a statutory audit once turnover or contribution crosses the prescribed thresholds. The audit examines the books, tests whether the financial statements give a true and fair view, and results in the auditor’s report and the filings that follow. Records typically involved: ledgers and trial balance, bank statements, purchase and sales records, fixed-asset and statutory registers, and the prior year’s financials.

When is a tax audit required under Section 44AB?

A tax audit under Section 44AB applies in defined situations, principally:

Business: where total turnover or gross receipts exceed ₹1 crore in the financial year. This threshold is raised to ₹10 crore where cash receipts and cash payments are each 5% or less of the total — so a largely digital business stays outside audit up to the higher limit.
Profession: where gross receipts exceed ₹50 lakh in the financial year — a flat limit. The digital-receipts relaxation that raises the business threshold does not apply to the professional audit limit.
Presumptive cases: where a taxpayer who would otherwise use a presumptive scheme (Sections 44AD/44ADA) declares income lower than the presumptive rate and exceeds the basic exemption limit, an audit may be triggered.

Whether an audit applies to your specific situation depends on your turnover, receipts, cash proportion, and presumptive position — assessed before any engagement. The audit report (Form 3CA/3CB and 3CD) is due one month before the ITR due date — generally 30 September 2026 for cases whose ITR due date is 31 October 2026. It focuses on the particulars Form 3CD requires — TDS compliance, disallowed payments, loans and deposits, and the like.

Internal audit

Internal audit is a periodic review of a business’s own processes and controls — purchases, payments, inventory, revenue recognition — to surface gaps, leakages and compliance risks before they become problems. It is mandatory for certain classes of companies and optional, but often useful, for others. The scope is agreed with management at the outset.

Stock and management audit

Stock audit — verification of physical inventory against the records — is commonly required by banks for working-capital limits, and by businesses wanting an independent count. Management audit is a broader review of operational efficiency and controls. Both are scoped to the specific question being asked. Where the same facility also requires CMA data or a project report for the bank, the two are prepared together so the stock figures agree.

Internal financial controls and IT systems

Where the company crosses the thresholds in Section 143(3)(i), the statutory auditor must also report on internal financial controls with reference to the financial statements — and where the accounting runs on a system, that means examining the controls around the system itself. Documentation, testing and IT general controls review are covered separately under internal financial controls and IS audit.

How engagements are accepted

Audit work carries independence and eligibility requirements; an engagement is accepted only where those are met for the entity concerned. The scope, timeline and fee are set out before work begins.

Audit & Assurance