Company Compliance · FY 2025-26

Statutory Audit —
Mandatory For Every Company

Who needs a statutory audit under the Companies Act 2013, how the auditor is appointed (Form ADT-1), what CARO 2020 covers, and the AGM, AOC-4 and MGT-7 due dates for FY 2025-26.

Updated for FY 2025-26 CA-Coordinated No Turnover Threshold

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Everycompany (no threshold)

Sec 139-147Companies Act 2013

30 SepAGM deadline

Rs 100/daylate AOC-4/MGT-7

Quick Answer

A statutory audit is the mandatory annual audit of a company's financial statements under Sections 139–147 of the Companies Act, 2013. It applies to every company — private limited, public limited, One Person Company and Section 8 — regardless of turnover, profit or activity, unlike tax audit which is turnover-based. It must be done by an independent practising Chartered Accountant / CA firm, and audited accounts must be ready before the AGM (by 30 September) and the AOC-4 / MGT-7 filings.

Applies to Every company

Threshold None

Auditor Practising CA

AGM by 30 Sep

Statutory audit is not the same as tax audit

A statutory audit (Companies Act) is compulsory for every company from year one, even with nil revenue. A tax audit (Section 44AB, Income-tax Act) is triggered only above turnover limits and can apply to firms and proprietors too. A company over the 44AB threshold needs both.

Who needs one

Statutory Audit Applicability by Entity Type

Statutory audit under the Companies Act has no turnover threshold — a company with zero revenue in its first year still needs its accounts audited before the AGM. LLPs and firms are governed differently.

Entity type	Statutory audit?	Governing law
Private Limited Company	Yes · every year	Companies Act 2013 (Sec 139-147)
Public Limited Company	Yes · every year	Companies Act 2013 (Sec 139-147)
One Person Company (OPC)	Yes · every year	Companies Act 2013 (Sec 139-147)
Section 8 (not-for-profit) Company	Yes · every year	Companies Act 2013 (Sec 139-147)
LLP	Only if > limits	LLP Act 2008 — turnover > Rs 40L or contribution > Rs 25L
Proprietorship / Partnership firm	No statutory audit	Tax audit u/s 44AB only if limits crossed

Every company is audited regardless of size; LLPs are audited only above the LLP Act thresholds.

Appointment

Appointing the Statutory Auditor & Form ADT-1

Only a Chartered Accountant in practice (or a CA firm/LLP where the majority of partners in India are CAs) can be appointed as statutory auditor under Section 141. Officers, employees and persons with prescribed financial interests in the company are disqualified.

First auditorBoard, within 30 days of incorporation (Sec 139(6))

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At the AGMAppointed to hold office till the 6th AGM (Sec 139(1))

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File ADT-1Intimate ROC within 15 days of the meeting

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RotationListed / prescribed cos rotate auditors (Sec 139(2))

ADT-1 has a 15-day window

Form ADT-1 must be filed with the Registrar of Companies within 15 days of the meeting appointing the auditor. Filing ADT-1 for the first auditor appointed by the Board is treated as good practice rather than a strict requirement, but the AGM appointment must always be reported.

Coverage

What the Statutory Audit Covers

Proper books of account maintained (Sec 128)
Schedule III financial statements — balance sheet, P&L, cash flow
True and fair view reported to shareholders (Sec 143)
Internal financial controls over reporting (Sec 143(3)(i))
CARO 2020 clause-wise reporting where applicable
Fraud reporting to Board / Central Govt (Sec 143(12))
Statutory dues, loans & defaults reviewed
Compliance with applicable Accounting Standards

CARO 2020 — who is exempt

The Companies (Auditor's Report) Order, 2020 adds 21 reporting clauses for financial years starting on or after 1 April 2021. It exempts banking & insurance companies, Section 8 companies, OPCs, small companies, and private companies meeting all criteria (not holding/subsidiary of a public company; capital + reserves up to Rs 1 crore; borrowings up to Rs 1 crore; revenue up to Rs 10 crore).

Know the difference

Statutory Audit vs Tax Audit

Both may apply to the same company, but they arise from different laws and produce different outputs. See our dedicated income-tax audit guide for the 44AB details.

Parameter	Statutory audit	Tax audit
Governing law	Companies Act 2013 (Sec 139-147)	Income-tax Act 1961 (Sec 44AB)
Applies to	Every company, no threshold	Turnover > Rs 1 Cr (Rs 10 Cr if cash ≤5%); profession > Rs 50L
Who conducts	Practising CA appointed as auditor	Practising Chartered Accountant
Output	Audit report to shareholders (+ CARO)	Form 3CA/3CB + 3CD on income-tax portal
Deadline anchor	Before AGM — by 30 September	Tax-audit report by 30 September of AY

A company crossing the 44AB limit needs both audits — usually on one shared document trail.

Not sure whether your company needs a tax audit as well?

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Due dates

Statutory Audit & Filing Timeline — FY 2025-26

For FY 2025-26 every deadline runs from the AGM, which must be held by 30 September 2026 (within 6 months of the 31 March 2026 year-end; first AGM within 9 months). AGM provisions do not apply to OPCs.

Milestone	Timeline	Notes
Financial year end	31 Mar 2026	Close books; year-end adjustments & reconciliations
Audit fieldwork & sign-off	Apr–Aug 2026	Schedule III financials audited and signed before AGM notice
AGM (adopt audited accounts)	By 30 Sep 2026	Within 6 months of FY end; not applicable to OPCs
Form AOC-4 (financials)	Within 30 days of AGM	OPCs file within 180 days of FY end
Form MGT-7 / MGT-7A (annual return)	Within 60 days of AGM	MGT-7A for OPCs & small companies
Form ADT-1 (auditor)	Within 15 days of appointment	~15 Oct 2026 if appointed at a 30 Sep AGM

Late filing has no upper cap

Late filing of AOC-4 or MGT-7 attracts an additional fee of Rs 100 per day per form with no upper limit. Unaudited financials cannot be validly adopted at the AGM, and three consecutive years of non-filing can lead to strike-off and director disqualification under Section 164(2). See ROC filing due dates and DIR-3 KYC.

You definitely need a statutory audit if

You run a Pvt Ltd, Public Ltd, OPC or Section 8 company
Your company had nil or negative revenue this year
You need to file AOC-4 / MGT-7 with the ROC
You want a clean audit trail for funding or due diligence

Statutory audit may not apply if

You are a proprietorship or partnership firm (only 44AB may apply)
You are an LLP below Rs 40L turnover and Rs 25L contribution
But confirm — LLP and 44AB tests are separate from this

Want your books finalised and audit coordinated before the AGM?

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Government sourcesCompanies Act 2013, Sec 139-147: mca.gov.in · ADT-1 / AOC-4 / MGT-7 filing: MCA V3 portal · CARO 2020 — MCA Order (FY on/after 1 Apr 2021) · Tax audit u/s 44AB: incometax.gov.in

Statutory Audit — Frequently Asked Questions

Applicability

Is statutory audit mandatory for a company with zero turnover?

Yes. Statutory audit under the Companies Act, 2013 applies to every company — private limited, public limited, One Person Company and Section 8 company — irrespective of turnover, profit or activity. Even a dormant company or one with nil revenue must get its financial statements audited every year. This is different from tax audit under Section 44AB of the Income-tax Act, which is triggered only when turnover or gross receipts cross specified thresholds.

Do LLPs require a statutory audit?

LLPs are governed by the LLP Act, 2008 — not by Sections 139-147 of the Companies Act. An LLP needs its accounts audited only if its annual turnover exceeds Rs 40 lakh or its capital contribution exceeds Rs 25 lakh. Below these limits, an LLP can file its Statement of Account and Solvency (Form 8) with a declaration from the partners instead of an audit. Companies, by contrast, need statutory audit from year one regardless of size.

Do proprietorships and partnership firms need a statutory audit?

No. There is no statutory audit under the Companies Act for a sole proprietorship or a partnership firm, because they are not companies. They may still require a tax audit under Section 44AB of the Income-tax Act if their turnover or professional receipts cross the prescribed limits, but that is a separate income-tax requirement, not a Companies Act audit.

Does statutory audit apply to a One Person Company (OPC)?

Yes. An OPC is a company under the Companies Act, 2013, so statutory audit is mandatory every year regardless of turnover. However, AGM provisions do not apply to an OPC, and an OPC files Form AOC-4 within 180 days of the financial year end. OPCs and small companies also get relief from certain requirements such as the cash-flow statement and internal financial controls reporting.

Auditor & ADT-1

Who can be appointed as a statutory auditor?

Only a Chartered Accountant in practice can be appointed as statutory auditor under Section 141 of the Companies Act, 2013. A CA firm (including an LLP) may be appointed if the majority of its partners practising in India are qualified Chartered Accountants, and only the CA partners can sign the audit report. Persons such as an officer or employee of the company, a person indebted to the company beyond prescribed limits, or a person holding securities of the company are disqualified.

When must the first auditor be appointed?

The Board of Directors must appoint the first auditor within 30 days of incorporation (Section 139(6)). If the Board fails, the members must appoint the first auditor within 90 days at an extraordinary general meeting. The first auditor holds office until the conclusion of the first AGM, after which an auditor is appointed at the AGM to hold office up to the sixth AGM.

Is Form ADT-1 required and what is the due date?

Yes, for the appointment made at the AGM. The company must intimate the auditor's appointment to the Registrar of Companies by filing Form ADT-1 within 15 days of the meeting in which the auditor is appointed. For an appointment made at a 30 September 2026 AGM, ADT-1 would be due around 15 October 2026. Filing ADT-1 for the first auditor appointed by the Board is generally treated as good practice rather than a strict requirement.

How long does a statutory auditor hold office?

An auditor appointed at the AGM holds office from the conclusion of that AGM until the conclusion of the sixth AGM — effectively a five-year term (Section 139(1)), subject to ratification norms. Listed companies and certain prescribed classes of companies must also rotate auditors under Section 139(2): an individual auditor for a maximum of one five-year term and an audit firm for a maximum of two five-year terms.

CARO & Scope

What is CARO 2020 and does it apply to my company?

CARO 2020 (Companies (Auditor's Report) Order, 2020) requires the statutory auditor to report on 21 specified matters — property, plant and equipment, inventory, loans, statutory dues, defaults, fraud, internal audit and more — through detailed clauses, for financial years beginning on or after 1 April 2021. It exempts banking and insurance companies, Section 8 companies, One Person Companies, small companies, and private companies meeting all prescribed criteria (not a holding or subsidiary of a public company; paid-up capital plus reserves up to Rs 1 crore; borrowings up to Rs 1 crore; and revenue up to Rs 10 crore).

What does the statutory auditor actually examine?

The auditor checks whether proper books of account have been kept; whether the Schedule III financial statements give a true and fair view; the adequacy and operating effectiveness of internal financial controls over financial reporting (with exemptions for OPCs and small companies); CARO 2020 matters where applicable; and reports material frauds to the Board and, above Rs 1 crore, to the Central Government under Section 143(12). The report is addressed to the shareholders and laid before the AGM.

What is the difference between statutory audit and internal audit?

Statutory audit is an external, independent audit of the financial statements required by law and reported to shareholders. Internal audit (Section 138) is an ongoing internal function required only for listed companies and prescribed classes of large companies, conducted by a CA, CMA or other professional appointed by the Board, and reporting to the Board or Audit Committee on risk and process controls. A company may need both.

Due Dates & Penalties

By when must the AGM be held and audited accounts filed?

For FY 2025-26, the AGM must be held by 30 September 2026 — within six months of the 31 March 2026 year-end (the first AGM gets nine months). Audited financial statements are adopted at the AGM. Form AOC-4 (financials) is filed within 30 days of the AGM and Form MGT-7 / MGT-7A (annual return) within 60 days of the AGM. OPCs file AOC-4 within 180 days of the FY end and have no AGM requirement.

What is the penalty for not conducting statutory audit?

Under Section 147 of the Companies Act, 2013, contravention of the audit provisions (Sections 139 to 146) makes the company punishable with a fine of Rs 25,000 to Rs 5,00,000, and every officer in default with a fine of Rs 10,000 to Rs 1,00,000. Separately, filing AOC-4 or MGT-7 late attracts an additional fee of Rs 100 per day per form with no upper cap, and unaudited financial statements cannot be validly adopted at the AGM or filed with the ROC.

What happens if a company keeps missing its audit and filings?

Prolonged non-filing of audited financials and annual returns exposes the company to strike-off from the register and its directors to disqualification under Section 164(2) after three consecutive years of default. A disqualified director cannot be reappointed or appointed in other companies for five years. Late fees of Rs 100 per day per form also accumulate without any cap, so the cost rises quickly.

Does TaxClue itself issue the statutory audit report?

No — and it should not. The statutory audit opinion must be issued by an independent practising Chartered Accountant or CA firm appointed as the company's auditor; that independence is the whole point. TaxClue manages everything around the audit — finalising books of account, preparing Schedule III financial statements, reconciliations, audit schedules and documentation, coordinating auditor queries, and completing the ADT-1, AOC-4 and MGT-7 filings — so the independent audit is completed smoothly and on time.

Does a company need both a statutory audit and a tax audit?

Often, yes. Every company needs a statutory audit under the Companies Act regardless of turnover. If the company also crosses the Section 44AB thresholds — turnover above Rs 1 crore (Rs 10 crore where cash receipts and payments are within 5%) or professional receipts above Rs 50 lakh — it additionally needs a tax audit, with Form 3CA/3CB and 3CD filed on the income-tax portal. Both are usually completed on one shared document trail.

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