Tax Audit Under Section 44AB —
Limit, Due Date & Penalty
When a tax audit u/s 44AB is compulsory, the Rs 1 crore vs Rs 10 crore business turnover limits, the Rs 50 lakh profession limit, Forms 3CA/3CB/3CD, the 30 September due date and the Section 271B penalty.
A tax audit u/s 44AB is mandatory when business turnover exceeds Rs 1 crore — raised to Rs 10 crore if both cash receipts and cash payments stay within 5% of the totals — or when professional gross receipts exceed Rs 50 lakh. It must be done by a practising Chartered Accountant, who files Form 3CA/3CB with Form 3CD. The report is due by 30 September 2026 for FY 2025-26. Missing it triggers a Section 271B penalty of 0.5% of turnover or Rs 1.5 lakh, whichever is lower.
Tax Audit Turnover Limits — FY 2025-26
The threshold depends on whether you run a business or a profession, and on how much of your money moves in cash. The higher Rs 10 crore business limit applies only when both cash receipts and cash payments are at or below 5% of the respective totals.
| Category | Audit Limit | Condition | Audit? |
|---|---|---|---|
| Business — cash / mixed | Rs 1 cr | Cash receipts or payments > 5% of total | Yes if over |
| Business — mostly digital | Rs 10 cr | Both cash receipts & payments ≤ 5% | Yes if over |
| Profession | Rs 50 lakh | No digital relaxation for professionals | Yes if over |
| Presumptive exit — 44AD | Any turnover | Profit below 6% / 8% & income above basic exemption | Yes |
| Presumptive exit — 44ADA | Any receipts | Profit below 50% & income above basic exemption | Yes |
The Rs 1 crore / Rs 10 crore business limits and the Rs 50 lakh profession limit are unchanged for AY 2026-27.
A common error is claiming the Rs 10 crore limit while paying vendors or salaries in cash. The higher threshold applies only if both aggregate cash receipts and aggregate cash payments are 5% or less of the totals. Fail either test and you fall back to the Rs 1 crore limit.
Not sure if your turnover crosses the audit limit?
Ask a CA →Forms 3CA, 3CB, 3CD & 3CEB
The Chartered Accountant uploads the audit report on the income-tax e-filing portal, which the taxpayer then accepts. The form used depends on whether the accounts are already audited under another law.
| Form | Who Uses It | Purpose |
|---|---|---|
| 3CA | Companies, co-op societies (already audited under another law) | Audit report where accounts are audited under another law (e.g. Companies Act 2013) |
| 3CB | Individuals, firms, LLPs audited only under the Income-tax Act | Audit report where accounts are audited solely u/s 44AB |
| 3CD | All audit cases (accompanies 3CA or 3CB) | Detailed statement of particulars covering the taxpayer's financials |
| 3CEB | International / specified domestic transactions | Transfer-pricing report (due date extends to 31 Oct 2026) |
Every company is audited under the Companies Act 2013 regardless of turnover, and uses Form 3CA for the 44AB tax audit. See our statutory audit guide for how the Companies Act audit differs from the income-tax audit.
When a Presumptive Taxpayer Needs an Audit
Taxpayers under the presumptive schemes — Section 44AD for business and Section 44ADA for professionals — are normally spared a tax audit. But the audit becomes compulsory in these situations.
- 44AD, profit below the presumptive rate: if declared profit is under 6% (digital) or 8% (cash) of turnover AND total income exceeds the basic exemption limit, an audit is required.
- 44ADA, profit below 50%: if a professional declares income under 50% of gross receipts AND total income exceeds the basic exemption limit, an audit is required.
- 44AD opt-out lock-in: once you opt out of 44AD you cannot re-enter for 5 years — during which an audit applies if income exceeds the basic exemption limit.
You likely need an audit if
- Business turnover crosses Rs 1 cr (or Rs 10 cr with < 5% cash)
- Profession receipts cross Rs 50 lakh
- You declare below the 44AD / 44ADA presumptive profit and are taxable
- You are a company or LLP audited under another law
You may be exempt if
- You stay within the 44AD / 44ADA presumptive scheme
- Turnover / receipts are below the thresholds
- Your total income is below the basic exemption limit
- You are salaried with no business or profession
Declared a low profit under 44AD or 44ADA? Check your audit exposure.
Get Expert Help →Due Date & the Section 271B Penalty
The tax-audit report must be filed by 30 September 2026 for FY 2025-26 (AY 2026-27). Cases with transfer-pricing (Form 3CEB) get until 31 October 2026. The ITR itself is then due by 31 October 2026 for audit cases.
Turnover Rs 2 cr — penalty
Turnover Rs 5 cr — penalty
The Section 271B penalty is 0.5% of turnover or Rs 1.5 lakh, whichever is lower. It may be waived under Section 273B for a reasonable cause — such as the death or serious illness of the auditor, a natural calamity, or resignation of the tax auditor. Do not rely on this; file on time.
- Books of account maintained u/s 44AA
- Practising CA appointed
- Form 3CA or 3CB prepared
- Form 3CD statement of particulars
- Form 3CEB if transfer pricing applies
- Report uploaded on the e-filing portal
- Report accepted by the taxpayer
- ITR filed by the audit due date
Want a CA to run your 44AB audit and file the ITR end to end?
Get Tax Audit Help →Tax Audit — Frequently Asked Questions
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