Tax Audit AY 2026-26
Introduction
Taxpayers engaged in business or profession must have their books of accounts audited if their turnover, receipts, or income exceed prescribed thresholds under Section 44AB. This tax audit is conducted by a Chartered Accountant in practice.
Who Requires a Tax Audit?
Following persons are compulsorily required to get their books of account audited by a Chartered Accountant:
|
Nature of Business or Profession |
Category of Taxpayer |
When audit is mandatory? |
|
Any professions (specified or non-specified) |
Any |
If gross receipts from profession during the relevant previous year exceeds Rs. 50 lakhs |
|
Business |
Cash receipt and payment up to 5% (See Note 1) |
If total sales, turnover or gross receipt from business during the previous year exceeds Rs. 10 crore |
|
Business |
Any |
If total sales, turnover or gross receipt from business during the previous year exceeds Rs. 1 crore |
|
Business eligible for Presumptive Tax Scheme under Section 44AD |
Resident Individual or HUF |
If income of assessee exceeds the maximum exemption limit and he has opted for the scheme in any of the last 5 previous years but does not opt for the same in current year. |
|
Business eligible for Presumptive Tax Scheme under Section 44AD |
Resident Partnership Firm (Other than LLP) |
Taxpayer has opted for the scheme in any of the last 5 previous years but does not opt for the same in current year. |
|
Profession eligible for Presumptive Tax Scheme under Section 44ADA |
Resident Individual or Resident Partnership Firm (Other than LLP) |
Taxpayer claims that his profits from profession are lower than the profits computed under Section 44ADA and total income exceeds the maximum exemption limit |
|
Business eligible for Presumptive Tax Scheme under Section 44AE |
Any Assessee engaged in plying, hiring or leasing of goods carriage |
Taxpayer claims that his profits from business are lower than the profit computed under Section 44AE |
|
Business eligible for Presumptive Tax Scheme under Section 44BB |
Non-resident assessee engaged in exploration of mineral oil |
Taxpayer claims that his profits from business are lower than the profit computed under Section 44BB |
|
Business eligible for Presumptive Tax Scheme under Section 44BBB |
Foreign Co. engaged in civil construction |
Taxpayer claims that his profits from business are lower than the profit computed under Section 44BBB |
Note 1: Following conditions are need to be fulfilled:
(a) Cash receipts, including amount received for sales, turnover or gross receipts, does not exceed 5% of the aggregate amount received during the previous year; and
(b) Cash payments, including amount incurred for expenditure, does not exceed 5% of the aggregate amount paid during the previous year.
For the purpose of computing the limit of 5%, payment or receipt by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the payment or receipt in cash
Forms for Filing Tax Audit Report
- Form 3CA:If audited under any other law.
- Form 3CB:If not audited under other laws.
- Form 3CD:Annexure to both forms.
Audit Requirements Under Other Laws
If books are audited under another law, filing the same audit report (Form 3CA and 3CD) suffices. If unavailable, Form 3CB and 3CD are required after a financial audit.
Due Dates
- With Transfer Pricing Report (Form 3CEB): 31st October of the relevant assessment year.
- Others:30th September of the relevant assessment year.
Penalties for Non-Compliance
Failure to conduct or file a tax audit may result in penalties under Section 271B.
Filing Process
The Chartered Accountant submits the audit report electronically on the Income-tax portal, which the assessee must approve.