Section 44AB — Tax Audit Requirements, Turnover Limits and Form 3CA 3CB 3CD

Section 44AB of the Income Tax Act requires certain businesses and professionals to get their accounts audited by a Chartered Accountant (CA) and submit an audit report — the Tax Audit Report — along with their Income Tax Return. A tax audit is separate from a statutory audit under the Companies Act. Here is the complete guide to Section 44AB.

Who Needs a Tax Audit?

• Business — Turnover above ₹1 crore: Any person carrying on a business where total sales/turnover exceeds ₹1 crore in a financial year
• Business — Turnover above ₹10 crore (digital transactions): If cash receipts and cash payments are each 5% or less of total receipts/payments — threshold enhanced to ₹10 crore
• Profession — Gross receipts above ₹50 lakh: Persons carrying on a profession (as specified) with gross receipts exceeding ₹50 lakh
• Presumptive scheme opt-out: A person eligible for presumptive taxation (44AD/44ADA) who declares income below the prescribed rate — must get a tax audit done
• Business loss cases: A person with business loss who wants to carry it forward must get audited if turnover exceeds the threshold

Tax Audit Forms

• Form 3CA: When the accounts of the taxpayer are already audited under any other law (e.g., company under Companies Act, co-operative society under Co-operative Societies Act). The CA gives a statement that the accounts have already been audited.
• Form 3CB: When accounts are audited only under Section 44AB (no other mandatory audit). The CA certifies the accounts and prepares the audit report.
• Form 3CD: Statement of particulars — a detailed prescribed form with 44 clauses covering: method of accounting, details of tax, TDS compliance, depreciation, loans above ₹20,000, cash transactions above limits, deductions claimed, etc. Must be attached to both 3CA and 3CB.

Due Date

• Tax audit report must be uploaded on the IT portal by 30 September (before the ITR filing due date of 31 October for audit cases)
• The CA uploads the report digitally; the taxpayer accepts it on the portal

Penalty for Non-Compliance

• Failure to get tax audit done or failure to submit report: Penalty of 0.5% of turnover/gross receipts — subject to a maximum of ₹1,50,000
• Reasonable cause exception available (bonafide failure)

Conclusion

Tax audit under Section 44AB is a critical annual compliance for all businesses above ₹1 crore turnover — requiring a comprehensive CA audit and the detailed Form 3CD report. SPOTON provides tax audit services and Form 3CA/3CB/3CD filing for businesses and professionals across Kerala. Contact us for expert tax audit services.