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Tax audit under Section 44AB: who needs it, limits and due dates

Turnover limits for businesses and professionals, presumptive-tax cases, Forms 3CA/3CB/3CD, due dates and the penalty for missing the audit.

By CA Dilbagh Singh, Chartered Accountant, Rohini, Delhi · Published 5 November 2026

Tax audit under Section 44AB of the Income-tax Act, 1961 is a report by a chartered accountant on the books of a business or profession, filed with the department before the income-tax return. Missing it attracts a penalty and makes the return defective, so it is worth checking early in the year whether it applies to you. This guide covers FY 2025-26 (AY 2026-27), the last year audited under the 1961 Act.

Who needs a tax audit

Business – turnover above ₹1 croreA tax audit is required when total sales, turnover or gross receipts of the business exceed ₹1 crore in the year.Sec 44AB(a)
Business – limit of ₹10 croreThe ₹1 crore limit rises to ₹10 crore if cash receipts are not more than 5% of total receipts and cash payments are not more than 5% of total payments. Receipts and payments by account-payee cheque, draft or electronic modes count as non-cash.Proviso to 44AB(a)
Profession – receipts above ₹50 lakhDoctors, lawyers, architects, consultants and other professionals need an audit when gross receipts exceed ₹50 lakh.Sec 44AB(b)
Presumptive tax – lower profit declaredA business under Section 44AD that declares profit below 6% (digital receipts) or 8% (cash receipts) and whose total income exceeds the basic exemption limit needs an audit. The same applies to a professional under 44ADA declaring less than 50%, and to transporters under 44AE declaring less than the presumptive amount.Sec 44AB(c)–(e)
Opting out of 44ADIf you opt out of 44AD within five years of opting in, you cannot use it for the next five years, and an audit applies whenever income exceeds the basic exemption limit.Sec 44AD(4)–(5)

Presumptive taxation itself is available only up to a turnover of ₹2 crore under 44AD (₹3 crore where cash receipts are within 5%) and gross receipts of ₹50 lakh under 44ADA (₹75 lakh where cash receipts are within 5%).

Forms used

  • Form 3CA – audit report where the accounts are already audited under another law, such as the Companies Act or LLP Act.
  • Form 3CB – audit report for all other cases, typically proprietorships and partnership firms.
  • Form 3CD – the statement of particulars attached to either report: 40+ clauses covering TDS compliance, cash payments under Section 40A(3), payments to MSEs under Section 43B(h), GST turnover, loans and deposits under 269SS/269T, and more.

Due dates for FY 2025-26

  • Tax audit report: 30 September 2026 – one month before the return due date.
  • Income-tax return (audit cases): 31 October 2026.
  • Transfer pricing cases (Form 3CEB): audit report by 31 October 2026 and return by 30 November 2026.

The CBDT sometimes extends these dates by notification or circular; always check the latest position on the e-filing portal. The taxpayer must approve the report on the portal after the CA uploads it – the report is treated as filed only after that approval.

Penalty for not getting the audit done

Under Section 271B, failure to get the accounts audited or to furnish the report can attract a penalty of 0.5% of turnover or gross receipts, up to ₹1,50,000. Section 273B allows the penalty to be dropped where there was reasonable cause. A return filed without a required audit report can also be treated as defective under Section 139(9).

What changes under the Income-tax Act, 2025

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. Tax audit continues under the new Act with renumbered sections and forms, starting from tax year 2026-27 (audits due in 2027). Audits for FY 2025-26 and earlier are still completed under Section 44AB of the 1961 Act.

Getting ready for the audit

  • Close books and reconcile all bank accounts, loans and credit cards.
  • Reconcile GST returns (GSTR-1, 3B and 9) with the books.
  • Match TDS deducted and deposited with Form 26AS/AIS, and clear any short deductions.
  • List cash payments above ₹10,000 per person per day and dues to MSE suppliers outstanding beyond 45 days.
  • Prepare stock statements, fixed asset register and depreciation working.

This article is general information, not advice for your specific case. Forms, limits and time limits can change through notifications and circulars – check the notice and the current law, or speak to us before you act.

Frequently asked questions

Is tax audit required if turnover is below ₹1 crore?

Usually not, unless you declare profit below the presumptive rate under Section 44AD/44ADA/44AE with income above the exemption limit, or you have opted out of 44AD within the lock-in period. Professionals need an audit only above ₹50 lakh receipts.

What is the due date of tax audit for FY 2025-26?

30 September 2026 for the audit report and 31 October 2026 for the return, unless extended by the CBDT. Transfer pricing cases have 31 October 2026 for the audit report and 30 November 2026 for the return.

What is the penalty for not filing a tax audit report?

Under Section 271B, 0.5% of turnover or gross receipts, subject to a maximum of ₹1,50,000, unless there is reasonable cause under Section 273B.

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