Audit Under Income Tax Act
Audit Under Income Tax Act – Classic Partners LLP
Classic Partner – Chartered Accountants & Tax Advisors
What is Audit Under the Income Tax Act?
Under the Income Tax Act, 1961, certain taxpayers are required to get their books of accounts audited by a Chartered Accountant. This is called a Tax Audit (u/s 44AB).
The objective is to ensure:
Accuracy and reliability of financial records
Proper reporting of income, expenses, and claims
Compliance with the provisions of the Income Tax Act
Tax audit is different from a statutory audit (under Companies Act) and applies even to proprietorships, partnerships, LLPs, and companies based on turnover/receipts.
Applicability of Tax Audit (Section 44AB)
| Category | Threshold for Audit | Remarks |
|---|---|---|
| Business | Turnover > ₹1 crore | Enhanced to ₹10 crore if cash transactions ≤ 5% of total receipts/payments |
| Profession | Gross Receipts > ₹50 lakhs | Applicable to doctors, lawyers, architects, CAs, etc. |
| Presumptive Business (44AD/44AE/44BB/44BBB) | If profit declared < deemed percentage | Audit mandatory even if below turnover limit |
| Presumptive Profession (44ADA) | If profit declared < 50% of gross receipts | Audit mandatory |
Key Forms & Reporting
Form 3CA – For assessees already subject to statutory audit
Form 3CB – For assessees not subject to statutory audit
Form 3CD – Detailed statement of particulars (50+ clauses covering depreciation, TDS, GST, loans, etc.)
Due Dates for Tax Audit
31st October – For taxpayers subject to audit
30th November – For assessees engaged in international/domestic transfer pricing (TP)
Late filing attracts penalty u/s 271B:
0.5% of turnover/gross receipts (max ₹1,50,000).
Benefits of Tax Audit
Ensures proper compliance with Income Tax provisions
Minimizes risk of penalties, disallowances, and scrutiny
Identifies financial discrepancies at an early stage
Improves credibility with banks, investors, and regulators
Other Relevant Sections
Section 44AB – Mandatory tax audit provisions
Section 44AD, 44ADA, 44AE – Presumptive taxation schemes
Section 44BB & 44BBB – Special cases for NRIs and foreign companies
Why Classic Partner?
At Classic Partner, our audit team ensures:
End-to-end tax audit services (from bookkeeping review to filing)
Accurate preparation of Form 3CD with UDIN-enabled certificates
Advisory on presumptive taxation and turnover planning
Compliance with reporting of TDS, GST, loans, related party transactions
Representation before tax authorities in case of queries or scrutiny
Need assistance with Tax Audit under Income Tax Act?
Classic Partner – your trusted Chartered Accountants in India for audit, tax, and compliance advisory.
