Appointment Letter explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The tax auditor should obtain an appointment letter signed by the person competent to verify the return under section 140, and record engagement terms under SA 210 with the scope expressly restricted to section 44AB and the Income-tax Rules.
From the ICAI Guidance Note on Tax Audit (Revised 2026), the concluding edition under the Income-tax Act, 1961. The SA 210 and SA 299 (Revised) requirements are auditing standards and continue unchanged; only the statutory reference inside the scope paragraph moves to section 63 of the Income-tax Act, 2025 and the Income-tax Rules, 2026 for later years.
What paragraph 9.23 requires
The tax auditor should obtain from the assessee a letter of appointment for conducting the audit mentioned in section 44AB. Around that appointment letter the Guidance Note builds four recommendations:
- It is advisable that it be signed by the person competent to sign the return of income in terms of section 140 of the Act.
- It would be useful if the letter affirms that no other auditor was appointed to conduct the tax audit for the year for which the appointment is being made.
- It may also give the name and address of the tax auditor for the previous year, wherever relevant — the information the incoming auditor needs in order to communicate with the previous auditor.
- It should also specify the remuneration of the tax auditor.
The appointment letter should come from the person who could verify the return — the managing director or a director for a company, the karta for a HUF, a designated partner for an LLP, and so on. A letter signed by an accounts manager or a consultant leaves the engagement's authority open to challenge, and the same section 140 competence question decides the exclusion at sub-clause (iii) of the Explanation to section 288(2).
The SA 210 engagement letter
SA 210, Agreeing the Terms of Audit Engagement, requires the auditor to agree the terms with management or those charged with governance as appropriate. The agreed terms need to be recorded in an audit engagement letter — a sample is at Appendix IX — or another suitable form of written agreement, and shall include:
| Content | |
|---|---|
| (a) | The objective and scope of the audit of the financial statements. It should be specifically mentioned that the scope is restricted to the provisions contained in section 44AB of the Income-tax Act, 1961 and the Income-tax Rules, 1962 |
| (b) | The responsibilities of the auditor |
| (c) | The responsibilities of management |
| (d) | Identification of the applicable financial reporting framework for the preparation of the financial statements |
| (e) | Reference to the expected form and content of any reports to be issued under the Act and Rules, with a statement that there may be circumstances in which a report may differ from its expected form and content |
The engagement letter should be sent preferably before the commencement of the engagement. It documents and confirms acceptance of the appointment, the objective and scope, and the extent of the auditor's responsibilities. Where an audit is conducted under a statute, acknowledgement of the auditor's letter by the assessee is considered sufficient compliance with SA 210.
Authentication of the particulars, and uploading
Two operational points close paragraph 9.23:
- The tax auditor should get the statement of particulars required in the annexure to the audit report authenticated by the assessee before he signs it.
- The tax auditor is required to upload the tax audit report directly on the e-filing portal.
Who makes the appointment
| Assessee | Who can appoint |
|---|---|
| Company | No general meeting is needed. The Board of Directors, or even any officer if so authorised by the Board |
| Firm | A partner, or a person authorised by the assessee |
| Proprietary concern | The proprietor, or a person authorised by the assessee |
This is one of the practical differences between the statutory audit and the tax audit: the section 139 machinery of the Companies Act does not apply to a section 44AB appointment.
Joint tax auditors
It is possible for the assessee to appoint two or more chartered accountants as joint auditors, in which case the audit report has to be signed by all of them. In case of disagreement they can report separately. Paragraph 17 of SA 299 (Revised), Joint Audit of Financial Statements, is quoted in the Guidance Note:
"The joint auditors are required to issue common audit report, however, where the joint auditors are in disagreement with regard to the opinion or any matters to be covered by the audit report, they shall express their opinion in a separate audit report. A joint auditor is not bound by the views of the majority of the joint auditors … the audit report(s) issued by the joint auditor(s) shall make reference to the separate audit report(s) issued by the other joint auditor(s)"
The responsibility of joint tax auditors is the same as in any other audit, for example an audit under the Companies Act, 2013; SA 299 (Revised) governs the detail. Note also that a joint assignment counts against the tax audit ceiling of both members or firms separately.
Worked example
A partnership firm appoints two CA firms as joint tax auditors for the year. The engagement is set up as follows:
- The appointment letter is issued by the managing partner — the person competent to verify the return under section 140 — names last year's tax auditor, confirms no other auditor has been appointed, and states the fee for each joint auditor.
- Each joint auditor sends an SA 210 engagement letter before fieldwork, with the scope restricted to section 44AB and the Rules, and obtains the firm's acknowledgement.
- Both communicate with the previous auditor.
- Form 3CD particulars are authenticated by the firm before signature.
- The joint auditors disagree on clause 21(b). They issue separate reports, each referring to the other, per SA 299 (Revised).
- The assignment counts as one against each joint auditor's ceiling of 60.
Audit checklist
- Obtain the appointment letter before starting, signed by a section 140 person.
- Confirm it names the previous year's tax auditor and affirms exclusivity.
- Ensure the remuneration is stated in the appointment letter.
- Issue an SA 210 engagement letter with the five required contents, scope restricted to section 44AB.
- Obtain the assessee's acknowledgement of that letter.
- Get the Form 3CD particulars authenticated by the assessee before signing.
- For joint audits, agree the division of work and apply SA 299 (Revised) to any disagreement.
Common mistakes
- Starting work on a verbal appointment and papering it afterwards.
- Accepting a letter from someone outside section 140.
- Omitting the scope restriction to section 44AB from the engagement letter.
- Signing Form 3CD before the assessee authenticates the particulars.
- Forcing a common opinion among joint auditors instead of reporting separately.