A tax audit is a statutory audit of a taxpayer's books of account by a Chartered Accountant, required under Section 162 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 (cash >5%) | Gross receipts > Rs. 50 lakh |
| Profession (digital ≥95%) | Gross receipts > Rs. 75 lakh |
| 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 (business) and Rs. 75 lakh limit (professionals) apply only where at least 95% of receipts AND payments are through banking/digital channels. Even one cash transaction above threshold can bring the lower limit (Rs. 1 crore / Rs. 50 lakh) back into play.
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 of the relevant Tax Year. For transfer pricing cases, the deadline is 31 October. ITR for audit cases is due by 31 October.
Penalty for Non-Compliance
Failure to get tax audit done when required attracts a penalty of 0.5% of turnover/gross receipts or Rs. 1,50,000, whichever is lower. Genuine cause (illness, natural disaster) can be accepted by the AO as reasonable cause to waive penalty.
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.
Need Help with Compliance?
Our CA experts guide you through the entire process — registration to filing.
Was this article helpful?
- ITR Filing
- TDS Return Filing
- Tax Planning