Tax Audit Under ITA explained: this guide covers what Tax Audit Under ITA 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.
A tax audit is a statutory audit of a taxpayer's books of account by a Chartered Accountant, required under Section 63 of ITA 2025 when turnover exceeds prescribed limits. The audit ensures that income, deductions, and compliance are correctly reported. The audit report is filed electronically along with the ITR.
Who Requires Tax Audit?
| Taxpayer Category | Threshold |
|---|---|
| Business (general — cash receipts >5%) | Turnover > Rs. 1 crore |
| Business (digital receipts ≥95%) | Turnover > Rs. 10 crore |
| Profession | Gross receipts > Rs. 50 lakh |
| Presumptive business or profession under Section 58(2) or 61(2), profits claimed lower than the deemed profits | Audit required (Section 63(1), Table: Sl. No. 2) |
| Any taxpayer with lower declared income (44AD opted out) | If income declared < 6%/8% of turnover |
Cash Turnover Rule — Enhanced Threshold
The Rs. 10 crore limit for business applies only where cash receipts do not exceed 5% of all amounts received AND cash payments do not exceed 5% of all payments made, so at least 95% of receipts AND payments are through banking/digital channels. If either cash limit is crossed, the Rs. 1 crore limit applies. For a profession, Section 63 has a single limit of Rs. 50 lakh; the Rs. 75 lakh figure belongs to presumptive taxation of a specified profession under Section 58, not to tax audit.
Form 3CA vs Form 3CB
- Form 3CA: Used when books of account are audited under another law (e.g., Companies Act — statutory audit). The CA certifies that books are maintained per ITA 2025 in addition to the statutory audit.
- Form 3CB: Used when there is no other statutory audit. The CA conducts and reports the audit solely under ITA 2025.
- Form 3CD: Statement of Particulars — detailed report by the CA covering all prescribed information (44 clauses covering income, deductions, loans, payments, TDS compliance, related party transactions, etc.)
Key Clauses in Form 3CD
- Clause 13: Method of accounting and changes in method
- Clause 17: Depreciation allowable as per IT Act
- Clause 21: Inadmissible payments (cash >Rs.10,000, personal expenses)
- Clause 26: TDS default details
- Clause 30A: Transfer pricing details (if applicable)
- Clause 44: Breakup of total expenditure into GST and non-GST categories
Due Date for Tax Audit
Tax audit report must be filed electronically (on income tax portal) by 30 September following the Tax Year, since Section 63(5) fixes the date one month before the ITR due date. For transfer pricing cases, the deadline is 31 October. ITR for audit cases is due by 31 October.
Fee for Non-Compliance
Failure to get the accounts audited and furnish the report as required under Section 63 attracts a fee under Section 428(c): Rs. 75,000 for a delay up to one month and Rs. 1,50,000 thereafter. It is a fixed fee and is not computed on turnover.
Specified Domestic Transactions
Taxpayers with specified domestic transactions (related party dealings in India) above Rs. 20 crore must also file Form 3CEB (Transfer Pricing report) by 31 October.
Need Expert Help?
TaxClue's CA and legal team can assist you. Contact us or explore our services.