Tax Audit Guide: Section 44AB (now Section 63)
Who needs a tax audit, the turnover thresholds, the shift from Section 44AB of the 1961 Act to Section 63 of the Income Tax Act, 2025, the audit forms, due dates and penalties.
Written by CA Gaurav Singh, Chartered Accountant (ICAI Membership No. 539050) · Last updated: 13 July 2026
Note: General information reflecting the position for FY 2025-26 / FY 2026-27. Thresholds, forms and dates should be verified against the current law before acting; this is not a substitute for professional advice.
A tax audit is one of the most misunderstood compliance obligations for growing businesses and professionals. It is not an assessment or a scrutiny by the department — it is an examination of the books of account by a Chartered Accountant, resulting in a report that the income-tax return relies on. This guide explains when it applies, what has changed under the new law, and what the process involves.
What is a tax audit?
Under the income-tax law, specified taxpayers must have their accounts audited by a Chartered Accountant and furnish the report in the prescribed format. The purpose is to ensure that the books present a true and fair view, that income is computed correctly, and that the disclosures required by the Act are made. The audit does not change the tax payable — it supports the accuracy of the return.
Who must get a tax audit?
| Taxpayer | Threshold that triggers audit |
|---|---|
| Business | Turnover / sales above Rs 1 crore in the financial year (raised to Rs 10 crore where both cash receipts and cash payments are each within 5% of the total) |
| Profession | Gross receipts above Rs 50 lakh in the financial year |
| Presumptive (business) | Declaring income lower than the presumptive rate and total income exceeding the basic exemption limit |
| Presumptive (profession) | Declaring income lower than 50% of gross receipts and total income exceeding the basic exemption limit |
Section 44AB and its successor, Section 63
The tax audit requirement has long sat in Section 44AB of the Income Tax Act, 1961. With the enactment of the Income Tax Act, 2025, the same requirement is carried forward into Section 63 of the new Act. The transition is prospective:
- FY 2025-26 (AY 2026-27): returns and audits filed in 2026 continue under the 1961 Act — Section 44AB.
- Tax Year 2026-27 onwards: income earned on or after 1 April 2026 falls under the 2025 Act — Section 63.
The substantive thresholds and the role of the Chartered Accountant continue; the change is principally one of section numbering and updated forms. A related transition reference is available in our Income Tax Act 2025 guide.
Audit forms and report
Where the accounts are already audited under another law — for example, a company audited under the Companies Act, 2013 — the tax audit report is furnished in Form 3CA. In all other cases it is furnished in Form 3CB. In both situations, the detailed statement of particulars is given in Form 3CD. Form references are being aligned under the 2025 framework.
Due dates
The tax audit report is generally required to be furnished by 30 September of the assessment year, and the income-tax return for taxpayers subject to audit by 31 October. Because these dates are occasionally extended by notification, the current-year position should be confirmed before filing.
Consequences of non-compliance
Failure to get the accounts audited, or to furnish the report by the due date, attracts a penalty of 0.5% of total sales, turnover or gross receipts, capped at Rs 1,50,000 (Section 271B of the 1961 Act, with a corresponding provision under the 2025 Act). Where the taxpayer shows a reasonable cause for the failure, the penalty may not be levied.
Frequently Asked Questions
What is a tax audit?
A tax audit is an examination of the books of account of a business or profession by a Chartered Accountant, to verify that they give a true and fair view of income and that the requirements of the income-tax law are met. The findings are reported in the prescribed audit forms.
Who is required to get a tax audit?
Broadly, a business with turnover above Rs 1 crore (raised to Rs 10 crore where cash receipts and cash payments are each within 5% of the total) and a professional with gross receipts above Rs 50 lakh in a financial year must obtain a tax audit. Certain presumptive-taxation cases also trigger it.
Has Section 44AB changed under the new Income Tax Act?
The tax audit requirement previously contained in Section 44AB of the Income Tax Act, 1961 is carried into Section 63 of the Income Tax Act, 2025. The 1961 Act (Section 44AB) continues to apply to FY 2025-26 (AY 2026-27) filings; the 2025 Act (Section 63) applies prospectively from Tax Year 2026-27, i.e. income earned on or after 1 April 2026.
What are the tax audit forms?
Where the accounts are already audited under another law (for example, a company under the Companies Act), the report is in Form 3CA; otherwise it is in Form 3CB. In both cases the statement of particulars is furnished in Form 3CD. Form references are being updated under the 2025 framework.
What is the due date for a tax audit?
The tax audit report is generally required to be furnished by 30 September of the assessment year, with the income-tax return for audited taxpayers due by 31 October. Dates for the current year should be confirmed, as extensions are sometimes notified.
What is the penalty for not getting a tax audit?
Failure to get accounts audited when required attracts a penalty of 0.5% of total sales, turnover or gross receipts, subject to a maximum of Rs 1,50,000 (Section 271B of the 1961 Act, with a corresponding provision under the 2025 Act). No penalty applies where there is reasonable cause.