Under the Income Tax Act, 1961, certain taxpayers must get their accounts audited by a Chartered Accountant and submit a Tax Audit Report.
This audit requirement, governed by Section 44AB, applies based on turnover, professional receipts, and income declaration status.
This blog explains who must undergo a tax audit, applicable thresholds, forms, deadlines, and penalties for FY 2024-25 (AY 2025-26).
Legal Reference
- Section 44AB, Income Tax Act, 1961
- Rule 6G, Income Tax Rules, 1962
- Form 3CA, Form 3CB, and Form 3CD (Tax Audit Report)
- Relevant CBDT Circulars and Finance Act 2024 amendments
Who is Required to Get a Tax Audit?
Businesses
- Turnover exceeds ₹1 crore, or
- Turnover exceeds ₹10 crore, and cash transactions exceed 5% of total receipts or payments
Note: If at least 95% of transactions are digital, tax audit applies only if turnover exceeds ₹10 crore.
Professionals (Specified under Section 44AA)
- Gross receipts exceed ₹50 lakh
- Includes legal, medical, engineering, architectural, accounting, consultancy, and other notified professions
Presumptive Tax Scheme Opt-Out
- Taxpayers under Section 44AD or 44ADA who declare income lower than presumptive rates and whose total income exceeds the basic exemption limit
Other Cases
- If the taxpayer is subject to audit under any other law (e.g., Companies Act)
- If voluntarily maintaining books but declaring income below applicable limits or presumptive rates
Who is Exempt from Tax Audit?
- Businesses and professionals who opt for presumptive taxation under Section 44AD, 44ADA, or 44AE, and meet turnover and profit conditions
- Individuals and firms with turnover below ₹1 crore and 95%+ digital transactions
- Professionals with receipts below ₹50 lakh and income declared at 50% or more
Example Scenarios
- A shopkeeper has ₹1.85 crore turnover, with 97% digital receipts
- Not liable for audit (turnover below ₹10 crore and cash <5%)
- A lawyer earns ₹65 lakh in professional fees
- Required to undergo tax audit (exceeds ₹50 lakh)
- A trader under Section 44AD declares 4% net profit, total income ₹8 lakh
- Audit required (profit below presumptive rate and income above exemption limit)
Tax Audit Forms
- Form 3CA – If audited under another law (e.g., Companies Act)
- Form 3CB – If audit is only under Income Tax Act
- Form 3CD – Statement of particulars (mandatory with both forms)
Tax Audit Due Dates for FY 2024-25
- Tax Audit Report Filing (Form 3CA/3CB and 3CD): 30th September 2025
- ITR Filing Due Date (Audit Cases): 31st October 2025
Penalties for Non-Compliance
- ₹1.5 lakh or 0.5% of turnover/gross receipts, whichever is lower
- Delay in audit filing may lead to disallowance of expenses and higher scrutiny
Conclusion
Tax audit is a critical compliance requirement for many businesses and professionals.
If your turnover or receipts cross the threshold, or if you opt out of the presumptive scheme, you must complete your audit before the deadline to avoid penalties and future assessments.
Call to Action
If your turnover or receipts are approaching the audit limit, it’s time to review your books.
Schedule your Tax Audit Consultation with Anshul Goyal, Chartered Accountant, and ensure timely and accurate compliance under Section 44AB.
Visit: https://calendly.com/anshulcpa
Disclaimer
This article is for informational purposes only. Applicability of tax audit depends on a variety of factors including turnover, digital receipts, professional income, and voluntary disclosures.
Anshul Goyal is a Chartered Accountant licensed with the Institute of Chartered Accountants of India (ICAI).
Consult a qualified professional before taking action based on this content.
Frequently Asked Questions
1. What is the turnover threshold for tax audit in FY 2024-25?
₹1 crore in general, ₹10 crore if digital transactions exceed 95%
2. Is tax audit applicable for freelancers?
Yes, if gross receipts exceed ₹50 lakh or profit declared is less than 50%
3. What if I miss the tax audit deadline?
You may face penalties under Section 271B and scrutiny under Section 143(2)
4. Can companies skip tax audit if turnover is below ₹1 crore?
No, companies may be subject to audit under other laws (e.g., Companies Act)
5. Which ITR form is used in audit cases?
Usually ITR-3 or ITR-5, depending on the business type