Tax audit compliance under Section 44AB is mandatory for private limited companies that cross prescribed thresholds. In 2025, with digital transactions on the rise and ICAI limits in force, companies must plan proactively. Here’s a comprehensive guide to ensure compliance, avoid penalties, and manage audits effectively.
Appoint a Chartered Accountant (CA)
CA files Form 3CA/3CB and Form 3CD using DSC
Company’s authorised signatory approves it on the e-filing portal
|
Type of Entity |
Audit Trigger |
|
Business (General) |
Turnover > ₹1 crore |
|
Business (>95% digital) |
Turnover > ₹10 crore, cash transactions ≤5% |
|
Professional |
Gross receipts > ₹50 lakh |
|
Presumptive Opt-out |
Lower profit declared than required under 44AD/ADA |
Regularly monitor both turnover and the mode of payments to determine whether your business qualifies for the ₹10 crore threshold.
Penalty: 0.5% of turnover or ₹1.5 lakh, whichever is lower
Relief under Section 273B is possible in case of:
CA resignation, illness, and natural disasters
E-filing portal issues, record loss
ICAI retains its 60 tax audit cap per CA per financial year. Key points:
Applies individually and to partners in a firm
Presumptive tax audits (44AD/44ADA/44AE) excluded
Revised reports not counted
Effective from 1st April 2026
Refer: ICAI Public Announcement – July 2025
Ensure your appointed CA has available audit slots before initiating the process.
|
Statutory Audit |
Tax Audit (Form 3CD) |
|
Under Companies Act, 2013 |
Under Income Tax Act, Section 44AB |
|
Mandatory for all private limited companies |
Triggered by turnover/profit conditions |
|
Opinion on fairness of financial statements |
Disclosure on depreciation, TDS, related party etc. |
Track turnover and cash ratio regularly
Use digital payments to benefit from ₹10 crore limit
Maintain accurate books with reconciled entries
Engage CA early (check ICAI audit slot availability)
Finish audit before 30th Sept for buffer on revisions
Consider presumptive taxation where eligible
Document delays (e.g., fire, illness) for Section 273B defence
Tax audit compliance for private companies isn’t just about legal formalities—it’s about planning capacity, transaction discipline, and avoiding risks. Understanding statutory audit for a private limited company also helps differentiate between statutory and tax audit obligations. The ICAI’s audit limit, penalty provisions, and evolving digital norms demand early action.
By maintaining robust records, embracing digital payments, and collaborating with qualified CAs, companies can confidently meet their tax audit obligations in 2025 and beyond
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