Tax Audit under Section 44AB: When Is It Applicable? (2026)
A tax audit is an examination of a taxpayer's books of account by a Chartered Accountant, required under Section 44AB of the Income Tax Act when prescribed thresholds are crossed. Knowing whether it applies to you is essential, because the penalty for non-compliance is significant.
What is a tax audit?
A tax audit results in the CA furnishing an audit report in Form 3CA or 3CB, accompanied by a detailed statement of particulars in Form 3CD. It is distinct from a statutory audit under the Companies Act, although for a company both may apply.
Threshold for business
For a business, tax audit is generally required if total turnover or gross receipts exceed Rs 1 crore in the financial year. However, a higher threshold of Rs 10 crore applies if cash receipts and cash payments each do not exceed 5% of the total — effectively rewarding businesses that transact digitally.
Threshold for profession
For a profession (such as legal, medical, engineering, accountancy, technical consultancy), tax audit is required if gross receipts exceed Rs 50 lakh in the financial year.
Presumptive taxation interplay
The interaction with presumptive taxation under Sections 44AD and 44ADA is where most confusion arises. In broad terms, if a taxpayer is eligible for the presumptive scheme but declares income lower than the presumptive rate and total income exceeds the basic exemption limit, a tax audit may be triggered. Conversely, a taxpayer correctly declaring at or above the presumptive rate generally does not require a tax audit on that basis.
This area has specific conditions and exceptions; the precise applicability should be confirmed for the particular facts.
Due date and penalty
The tax audit report must generally be filed by 30 September of the assessment year (with the return then due by 31 October for audit cases). Failure to get accounts audited can attract a penalty under Section 271B — broadly 0.5% of turnover, subject to a monetary ceiling — unless reasonable cause is shown.
Because thresholds, the 5% test and the presumptive interplay each have nuances, a brief professional review is the safest way to confirm applicability before the deadline.
Frequently Asked Questions
What is the tax audit turnover limit?
For business, the basic threshold is Rs 1 crore, extended to Rs 10 crore if both cash receipts and cash payments are within 5% of the total. For professions, the limit is Rs 50 lakh of gross receipts.
What is the due date for tax audit?
The tax audit report is generally due by 30 September of the assessment year, with the income tax return for audit cases due by 31 October.
What is the penalty for not getting a tax audit done?
Under Section 271B, the penalty is broadly 0.5% of turnover or gross receipts, subject to a monetary ceiling, unless reasonable cause is established.