Does your company need a tax audit?
Section 44AB thresholds, who signs it, and the penalty for missing it.
Reviewed 4 June 20261 min read
A tax audit under Section 44AB of the Income-tax Act is separate from the statutory audit under the Companies Act.
Thresholds
- Required when turnover exceeds Rs 1 crore.
- Raised to Rs 10 crore only if both aggregate cash receipts and cash payments are 5% or less of the totals (i.e. a largely digital business).
- For professions, the threshold is gross receipts above Rs 50 lakh.
Who signs it
A Chartered Accountant conducts the tax audit and reports it in Form 3CA + 3CD (3CA applies because the company is already audited under the Companies Act).
Penalty
Failure attracts a penalty under Section 271B of the lower of 0.5% of turnover or Rs 1,50,000.
Frequently asked questions
Is a tax audit the same as a statutory audit?+
No. The statutory audit (Companies Act, Section 139) is mandatory for every company every year. The tax audit (Income-tax Act, Section 44AB) is only required above the turnover thresholds.
What is the tax audit turnover limit?+
Rs 1 crore, raised to Rs 10 crore only if both cash receipts and cash payments are 5% or less of the respective totals.