Tax audit under Section 44AB of the Income-tax Act is applicable to specified categories of assessees based on turnover, gross receipts, profits declared, or opt-out from presumptive taxation schemes. The objective is to verify books, compliance, and information reporting through Forms 3CA/3CB and 3CD.
Non-compliance attracts penalty under Section 271B and may delay processing of loss returns and refunds. Management should plan audit timelines alongside statutory audit and GST annual returns.
This article covers applicability, due dates, and key Form 3CD clauses.
Who is covered
- Business: Turnover exceeds ₹1 crore (₹10 crore if aggregate cash receipts and payments do not exceed 5% of total receipts and payments).
- Profession: Gross receipts exceed ₹50 lakh (₹75 lakh if specified digital receipts threshold is met).
- Section 44AD/44ADA: Assessee declaring income below presumptive rate or opting out of scheme — audit if income exceeds basic exemption.
- Section 44AE, 44BB, 44BBB: Separate thresholds and conditions apply.
- Others: Persons covered by other clauses (e.g. certain trusts, cooperative societies) as prescribed.
Due dates and extensions
Tax audit report is generally due by 30 September of the assessment year (or 31 October for transfer pricing cases). CBDT notifications may extend dates for specified regions or years — verify each year on the portal.
| Form | Purpose | Typical due date |
|---|---|---|
| 3CA + 3CD | Company / entity audited under other law | With ITR due date |
| 3CB + 3CD | Other assessees | 30 September AY |
| ITR | Income return after audit | Same as audit due date |
Late filing: penalty under Section 271B (minimum ₹1,50,000 or 0.5% of turnover, subject to limits); ITR may be defective.
Tax auditor appointment and process
- Appoint a chartered accountant holding full-time certificate of practice.
- Provide trial balance, GST returns, TDS returns, fixed asset registers, and related-party data.
- Address management representations on litigation, fraud, and going concern.
- Review internal controls where required; document sampling for 3CD clauses.
Form 3CD — selected important clauses
Form 3CD contains numerous clauses; auditors report prescribed particulars including:
- Clause 21 — GST expenditure and reconciliation with turnover.
- Clause 31 — Section 40A(3) cash payment limits.
- Clause 34 — TDS defaults and interest.
- Clause 35 — Specified domestic transactions / transfer pricing reference.
- Clause 40 — Section 269SS/269T loans and deposits.
- Clause 44 — Break-up of total expenditure.
Management must certify accuracy; false particulars may attract penalties for both assessee and auditor under respective sections.
Coordination with other audits
Align tax audit with statutory audit under the Companies Act, GST audit (where applicable), and transfer pricing documentation to avoid conflicting figures. Single set of related-party and international transaction schedules benefits all engagements.
General professional information only. Thresholds and due dates change by notification; verify current law for your assessment year.