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June 26, 2026
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BySteffy A
Tax Audit under Section 44AB of Income Tax Act
Introduction
Tax Audit under Section 44AB applies to every business or professional in India that crosses the prescribed turnover or income limits. It helps ensure accurate reporting of income and expenses while maintaining proper books of accounts.
For Assessment Year 2025-26, tax audits continue to be governed by Section 44AB of the Income-tax Act, 1961, and audit reports are filed using Forms 3CA, 3CB, and 3CD. Under the Income Tax Act, 2025, the corresponding provisions are covered under Section 63, and tax audit reports will eventually be furnished in Form No. 26.
In this blog, we will explain the applicability of tax audit, turnover limits, audit forms, due dates, penalties, and key compliance requirements under Section 44AB.
What is Tax Audit under Section 44AB?
A tax audit is an examination of the financial records of a taxpayer by a Chartered Accountant to verify the correctness of income, deductions, and claims reported under the Income Tax Act, 1961.
The primary goal of Section 44AB of the Income Tax Act, 1961 corresponding to Section 63 of the Income Tax Act, 2025, is to ensure that books of accounts are properly maintained and that the Income Tax Return (ITR) reflects accurate financial information.
Who Needs to Get a Tax Audit Done?
|
Type of Taxpayer |
Threshold Limit for AY 2025-26 |
Conditions / Remarks |
|
Business |
Turnover exceeds ₹1 crore |
Mandatory tax audit. |
|
Business (Opting for Section 44AD) |
Turnover up to ₹2 crore but profit shown below 6% (digital) or 8% (cash) of turnover |
Tax audit required. |
|
Business (Non-Cash Receipts ≤ 5%) |
Turnover limit increased to ₹10 crore |
Applies only if cash transactions are minimal. |
|
Professionals (Section 44ADA) |
Gross receipts exceed ₹50 lakh |
Tax audit mandatory. |
|
Presumptive Income Declared Lower Than Prescribed |
Applicable |
Tax audit required if income is below presumptive limit and total income exceeds the basic exemption limit. |
To understand Tax Audit under Section 44AB thresholds, turnover calculations, presumptive taxation provisions, and filing requirements in greater detail, read our detailed guide on Tax Audit Applicability & Tax Audit Return Filing.
Forms Used in Tax Audit Filing
|
Form |
Applicability |
Purpose |
|
Form 3CA |
For taxpayers who are already required to get their accounts audited under any other law (like Companies Act) |
Report of audit under Section 44AB where other statutory audits exist. |
| For taxpayers who are not required to get accounts audited under any other law |
Audit report specifically under the Income Tax Act. |
|
|
Form 3CD |
Statement of particulars to be filled along with 3CA or 3CB |
Contains detailed financial, compliance, and deduction information. |
Note: For tax audits relating to Assessment Years up to AY 2026-27, Forms 3CA, 3CB, and 3CD will continue to apply. Under the Income Tax Act, 2025, the corresponding Tax Audit under Section 44AB report will be furnished in Form No. 26 under Section 63. Form No. 26 will apply for tax audits from Tax Year 2026-27 onwards.
What Details Are Included in Form 3CD?
Form 3CD includes a detailed breakdown of:
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Nature of business or profession
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Details of depreciation, deductions, and disallowances
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Compliance with TDS and GST provisions
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Quantitative stock details
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Information on loans, advances, and related party transactions
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Audit observations, if any
What Is the Due Date for Filing the Tax Audit Report?
The tax audit report must be uploaded electronically by a Chartered Accountant using their digital signature before the due date.
- Original Due Date (AY 2025-26): September 30, 2025
- Extended Due Date (as per CBDT Notification): October 31, 2025
This extension allows businesses and professionals additional time to finalize their audited statements and file accurate reports.
What Happens If You Miss the Tax Audit Deadline?
Non-compliance under Section 44AB may lead to a penalty under Section 271B of the Income Tax Act.
|
Nature of Default |
Penalty Imposed |
|
Failure to get accounts audited or file report by due date |
0.5% of turnover or gross receipts (maximum ₹1,50,000) |
However, no penalty is levied if the taxpayer can prove that the delay occurred due to a reasonable cause (such as illness or system failure).
How Ebizfiling Helps with Tax Audit Compliance?
At Ebizfiling, we help businesses and professionals manage their Tax Audit under Section 44AB efficiently.
Our team assists with:
- Assessing audit applicability based on turnover and profit
- Preparing and reviewing financial records
- Filing Form 3CD/3CB and Form 3CA online
- Coordinating with Chartered Accountants for report submission
- Ensuring compliance with the latest CBDT updates and Income Tax deadlines.
With professional support, you can focus on business growth while we handle your statutory tax audit requirements.
Conclusion
Tax Audit under Section 44AB of the Income Tax Act, 1961 plays an important role in ensuring transparency, accuracy, and compliance in financial reporting. Businesses and professionals who meet the prescribed turnover or income thresholds must complete the audit within the applicable due dates to avoid penalties and maintain regulatory compliance. Under the New Income Tax Act, 2025, these provisions are covered under Section 63, with the overall objective of ensuring proper maintenance of books of accounts and accurate tax reporting remaining unchanged. Timely compliance with tax audit requirements helps taxpayers avoid legal issues while strengthening their financial credibility.
Suggested Reads:
LLP Turnover Limits & Tax Requirements
Frequently Asked Questions
1. What is the main purpose of a Tax Audit under Section 44AB?
It ensures that income, expenses, and claims reported in your Income Tax Return are accurate and in line with the Income Tax Act. It also promotes transparency in financial reporting.
2. Who is responsible for conducting a Tax Audit?
Only a Chartered Accountant (CA) registered with the ICAI can perform the audit and upload the report on the income tax portal.
3. What is the due date for filing Form No. 26 under the Income Tax Act, 2025?
Form No. 26 is generally required to be furnished one month before the due date for filing the Income Tax Return under Section 263 of the Income Tax Act, 2025, subject to any extensions or notifications issued by the Government.
4. Is every business required to undergo a Tax Audit?
No, it applies only to businesses or professionals whose turnover or receipts exceed the limits under Section 44AB.
5. What forms are used for Tax Audit filing?
Form 3CA, Form 3CB, and Form 3CD are used based on the taxpayer’s category and whether other statutory audits are applicable.
6. Can a small business below ₹1 crore turnover be audited?
Yes, if it opts out of presumptive taxation and shows profits below 6% (digital) or 8% (cash), a tax audit becomes mandatory.
7. What are the penalties for missing the audit deadline?
Under Section 271B, a penalty of 0.5% of turnover (maximum ₹1,50,000) may be levied if you fail to get accounts audited on time.
8. Can the Tax Audit Report be revised after submission?
Yes, it can be revised if any factual errors or omissions are found before filing the final income tax return.
9. How is Form 3CD filed online with Ebizfiling?
Ebizfiling assists taxpayers throughout the Tax Audit under Section 44AB filing process by coordinating with qualified Chartered Accountants, preparing the required information, and facilitating the filing of Form 3CD on the Income Tax portal. Once the audit report is uploaded by the Chartered Accountant, the taxpayer must review and approve it electronically through their Income Tax account to complete the filing process.
10. How can Ebizfiling help with Tax Audit compliance?
Ebizfiling manages end-to-end Tax Audit filing — from assessing applicability and preparing documents to filing Form 3CA/3CB and 3CD online before the due date.
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