Comprehensive Guide to Tax Audit Under Income Tax Act#
What is Tax Audit?#
Tax audit is an examination of books of accounts under Section 44AB of Income Tax Act.
Who Must Get Tax Audit?#
By Turnover:#
- Business: Turnover > Rs 1 crore. This threshold rises to Rs 10 crore where both cash receipts and cash payments are 5% or less of their respective totals. Fail either test and it reverts to Rs 1 crore.
- Profession: Gross receipts > Rs 50 lakh. No cash-based relaxation applies — this cap is uniform whether receipts are in cash or digital.
Presumptive Taxation:#
- Business opting for 44AD: Audit triggered once turnover crosses the presumptive ceiling of Rs 2 crore — or Rs 3 crore where cash receipts stay within 5% of total receipts.
- Profession opting for 44ADA: Audit triggered once gross receipts cross Rs 50 lakh — or Rs 75 lakh where cash receipts stay within 5% of total receipts.
Other Cases:#
- Loss expected
- Claiming 80IA benefits
- Any other case specified
Due Dates#
| Category | Due Date |
|---|---|
| Regular cases | September 30 |
| Transfer pricing | October 31 |
Form 3CA and 3CD#
Form 3CA:#
- Audit report
- Certified financial statements
Form 3CD:#
- Part A: Tax audit report
- Part B: Particulars required
Key Points to Check#
- Turnover correctly shown
- Expense claims valid
- TDS properly deducted
- Depreciation claimed correctly
- Advance tax paid
Penalty for Non-Compliance#
- Rs 1 lakh if audit not done
- Disallowance of expenses
- Additional tax liability