Tax audit - stay compliant under Section 44AB

Section 44AB mandates a tax audit for certain categories of taxpayers. If your business turnover exceeds ₹1 crore (or ₹10 crore with less than 5% cash transactions) or professional receipts exceed ₹50 lakh, you must get your accounts audited by a CA.

Only a Chartered Accountant (CA) registered with the Institute of Chartered Accountants of India (ICAI) can conduct a tax audit under Section 44AB.

The tax audit report must be filed by 30 September of the assessment year. This is before the due date for filing income tax returns (31 October for audit cases).

The CA files Form 3CA or 3CB (depending on whether the taxpayer is required to get accounts audited under any other law) along with Form 3CD (comprehensive audit report) and the CARO report.

If a tax audit is mandatory and not conducted, the Income Tax Department can levy a penalty under Section 271B of the Income Tax Act, which can be the lower of ₹1,50,000 or 0.5% of total sales, turnover or gross receipts.

No. A statutory audit is mandatory under the Companies Act for companies and LLPs. A tax audit is mandatory under the Income Tax Act for businesses/professionals exceeding specified turnover limits. A single CA can conduct both.

You need to provide your books of accounts, financial statements, bank statements, GST returns, TDS returns, invoices, expense vouchers, and any other supporting documents for the financial year being audited.

No. If a tax audit is mandatory under Section 44AB, the assessee must file the audit report before the due date. Otherwise, deductions claimed may be disallowed and penalties may apply.

From FY 2020-21, businesses with turnover up to ₹10 crore are exempt from tax audit if cash receipts and cash payments do not exceed 5% of total receipts/payments. This was introduced to promote digital payments.

Yes, if the turnover exceeds the prescribed limits. For businesses under Section 44AD, tax audit is required if income is less than deemed profits and total sales exceed ₹2 crore.

CARO (Companies (Auditor's Report) Order) is a comprehensive report prepared by the auditor of a company, covering various aspects of financial reporting, internal controls, and compliance with laws and regulations.

Typically 15-30 working days, depending on the size and complexity of your business operations. Simple businesses with organized books may take less time.

Yes, you can change your CA for tax audit. The new CA will need to obtain details of the previous audit and coordinate with your tax return filing.

Freelancers and professionals with gross receipts exceeding ₹50 lakh (or ₹75 lakh under Section 44ADA) must get their accounts audited. Under Section 44ADA, professionals with receipts up to ₹75 lakh can declare 50% as income without audit.

Under Section 271B, the penalty can be ₹1,00,000 or 0.5% of total turnover/gross receipts, whichever is lower. However, a reasonable cause can be shown for non-compliance.