Limits, Due Dates and Forms for Tax Audit u/s 44AB

A tax audit is an examination of a business's or professional's books of account by a chartered accountant, required by income-tax law when turnover or receipts cross a set limit. The chartered accountant reports on the accounts and on a long list of tax particulars in the prescribed form, which the department uses during assessment. IMAK Advisory, an ICAI-registered CA firm in Bengaluru, carries out tax audits for proprietors, partnership firms, LLPs and companies across India.

The tax audit requirement is mostly about numbers: total sales, the share of cash in receipts and payments, and whether a presumptive scheme was used. This page explains the current limits under Section 44AB and the new Section 63, the tax audit limit for individuals, tax auditor eligibility, the forms, every recent due date including the tax audit due date for FY 2022-23, the limits that applied in AY 2021-22, AY 2022-23 and AY 2023-24, and what this audit does and does not cover.

• Tax audit u/s 44AB for business and profession, and Section 63 from tax year 2026-27
• Applicability checks for traders, manufacturers, professionals, F&O traders and presumptive taxpayers
• Form 3CA, 3CB and 3CD for AY 2026-27; Form 26 from tax year 2026-27
• Review of books, depreciation, disallowances, TDS and GST reconciliation
• Filing of the audit report and the income tax return before the due dates
• Replies to notices on audit reports

The audit lets the department rely on a professional's verification of the books before it assesses a return. The chartered accountant checks that books are properly kept, that income is computed as the law requires, and reports particulars such as depreciation, disallowed expenses, payments to related persons, loans taken and repaid in cash, TDS compliance, and GST turnover. Errors found here are far cheaper to fix than errors found in an assessment.

A tax audit is not the same as a statutory audit under company law. A company may need both; a proprietor or partnership firm needs only the Section 44AB audit, and only when it crosses the limits.

The tax audit requirement applies to any person carrying on business or profession – individual, HUF, firm, LLP, company or trust – in these situations:

Cash for the 5% test means payments and receipts by cash, and also cheques or drafts that are not account payee. Electronic payments, UPI and account payee cheques are not cash. If the business is close to the limit, monitoring cash during the year matters more than computing it at the end.

What Counts as Turnover

• Sales of goods and services, net of returns, discounts and GST collected where the books treat GST separately
• Gross receipts of a profession, such as fees from clients
• For futures and options trading, the turnover computed under ICAI's guidance, which is based on the total of favourable and unfavourable differences, not on contract value
• Income such as salary, interest, rent or capital gains is not business turnover and does not count

There is no separate tax audit limit for individuals; the same limits apply to an individual, a firm or a company. What matters is whether the individual carries on a business or profession and how large it is. A salaried person with large investment gains does not need this audit; a salaried person who also runs a business or trades in futures and options might.

• Proprietor of a shop or trading business: ₹1 crore, or ₹10 crore with cash under 5%
• Doctor, architect, consultant or other professional: ₹50 lakh of gross receipts
• Freelancer using the presumptive scheme for professionals: no audit if 50% or more of receipts is declared as profit and receipts stay within the scheme's limit
• Individual F&O trader: depends on the turnover computed under ICAI guidance and on whether a presumptive scheme was used earlier
• Individual with only salary, interest, rent and capital gains: no audit

The question we answer most often from individuals is whether a loss in F&O trading forces an audit. It does not by itself; the answer depends on the turnover, the profit declared and the history of presumptive taxation. We check all three before you file.

The presumptive schemes let small businesses and professionals skip detailed books and an audit by declaring income at a fixed rate. They are useful, but the conditions are strict, and the most common surprise in this area comes from leaving a scheme too early.

Under Section 44AD, a business that uses the scheme and then declares lower profit in any of the next five years cannot return to the scheme for the following five years. In those years, books must be kept and the accounts audited if income exceeds the basic exemption limit. Before declaring a lower profit for one year, it is worth working out the cost of the next five.

• Check the scheme's limit for the right year – the higher limits apply only from AY 2024-25
• Keep evidence of digital receipts if you rely on the 6% rate
• Remember that LLPs and companies cannot use these schemes
• Agents, commission earners and certain professions are excluded from Section 44AD

The ₹10 crore limit depends on two separate tests: cash receipts must be within 5% of total receipts, and cash payments within 5% of total payments. Missing either test brings the limit back to ₹1 crore. Businesses that are close to the line can usually stay within it with a few habits.

• Pay suppliers, salaries and rent through bank transfer or UPI, even small amounts
• Collect from customers through UPI, cards or bank transfer, and deposit any cash the same day so it is easy to track
• Avoid bearer cheques and cheques that are not crossed account payee, which count as cash
• Review the cash percentage every quarter rather than at the year end
• Keep petty cash for genuinely small expenses and record each one

Large cash payments are also a problem in their own right: payments above the permitted cash limit to one person in a day are disallowed as expenses, whatever the turnover.

Before any audit, the law requires certain businesses and professionals to keep books of account. Individuals and HUFs in business must keep books if income exceeded ₹2.5 lakh or turnover exceeded ₹25 lakh in any of the three preceding years; for others, the limits are lower. Professionals such as doctors, lawyers, engineers, architects, accountants and consultants must keep specified books once their receipts cross the prescribed level.

• Cash book and journal, with ledgers for customers, suppliers and expenses
• Copies of bills issued and original bills received
• For doctors, a daily case register and an inventory of drugs where applicable
• Records kept for the period the law requires, usually six years from the end of the relevant year

Books kept month by month, with bank accounts reconciled, make the audit shorter and the report cleaner.

The department compares the audit report with the return, GST data and TDS statements. Mismatches – for example, a disallowance shown in the report but not added back in the return – lead to adjustments when the return is processed. If you receive an intimation or notice, compare it clause by clause with the report before replying; many can be resolved by explaining or correcting a single figure.

Tax auditor eligibility is set by the income-tax law and by ICAI. Only an "accountant" as defined in the law – in practice, a chartered accountant holding a certificate of practice – can carry out the audit and sign the report.

• The auditor must be a member of ICAI in practice, and must quote a UDIN on every report
• Where the audit is in a firm's name, the firm registration number is stated
• A chartered accountant who is an employee of the business, or who writes its books of account, cannot be its tax auditor
• An internal auditor of the business should not be its tax auditor under ICAI guidance
• The statutory auditor of a company can also be its tax auditor
• ICAI limits the number of tax audits a member can sign in a year; from the 2026-27 cycle the limit is 60 per partner, and a partner cannot sign on behalf of another

Ask any proposed tax auditor for the name and membership number of the signing partner, and check the UDIN on the ICAI portal when you receive the report.

Form 26 brings the audit report and the statement of particulars into one form. Part B, the statement of particulars, applies in every case; Part C is used when accounts are audited under another law and Part D when they are not. Audits of FY 2025-26 accounts, being done now, still use Forms 3CA, 3CB and 3CD.

The audit report is due one month before the due date of the return for audit cases. The normal dates are 30 September for the report and 31 October for the return; for businesses with international or specified domestic transactions that need a transfer pricing report, the return is due on 30 November and the audit report on 31 October.

Tax Audit Due Date for FY 2022-23

The tax audit due date for FY 2022-23, which is AY 2023-24, was 30 September 2023 for the report, and 31 October 2023 for the return of audit cases. If a report for that year was not filed, it is now late; a penalty can apply unless there was a reasonable cause, and any notice should be answered with the facts of the delay.

Many people search for the limit of a specific year because they are checking an old return or answering a notice. The limits for the last few years are below.

Income Tax Audit Limit for AY 2023-24

The income tax audit limit for AY 2023-24 (FY 2022-23) was ₹1 crore of turnover for businesses, raised to ₹10 crore where cash receipts and cash payments were each within 5%, and ₹50 lakh of gross receipts for professions. Put simply, the tax audit limit for AY 2023-24 was the same as for the two years before it.

Tax audit applicability for AY 2023-24 also depended on presumptive taxation: a business under Section 44AD (turnover up to ₹2 crore in that year) or a professional under Section 44ADA (receipts up to ₹50 lakh) did not need an audit if it declared at least the presumptive profit, but did if it declared less and its income exceeded the basic exemption limit.

Tax Audit Limit for AY 2022-23

The tax audit limit for AY 2022-23 (FY 2021-22) was also ₹1 crore for businesses, ₹10 crore with cash within 5%, and ₹50 lakh for professions. The report was due on 30 September 2022, extended to 7 October 2022.

Tax Audit Limit for AY 2021-22 and Its Due Date

People checking the tax audit limit for AY 2021-22 due date usually need both answers. AY 2021-22 (FY 2020-21) was the first year of the ₹10 crore limit for businesses with cash within 5%; the basic limit stayed at ₹1 crore, and ₹50 lakh for professions. Because of the pandemic and the launch of the new e-filing portal, the report's due date was extended several times, finally to 15 February 2022, with returns for audit cases due by 15 March 2022.

1. Applicability check: turnover, cash share, presumptive history and the right form.
2. Engagement letter: scope, responsibilities, timeline and the documents needed.
3. Books and records: we review the ledger, bank reconciliations, stock records and fixed asset register.
4. Verification: sample checks of sales, purchases, expenses and capital items against documents.
5. Tax particulars: depreciation, disallowances, related party payments, cash transactions, loans, TDS compliance and GST turnover are compiled for each clause.
6. Draft and discussion: observations are shared with you, and corrections are made in the books where needed.
7. Signing and upload: the report is signed with a UDIN and uploaded on the e-filing portal; you accept it from your login.
8. Return: the income tax return is filed using the audited figures before the due date.

Step six is where the audit pays for itself: a disallowance or a TDS default reported in the form is better corrected before the report is signed than explained in an assessment later.

• Books of account for the year: ledger, cash book, bank book and journal
• Bank statements for every account and the reconciliations
• Sales and purchase registers with invoices; GST returns for the year
• Stock records and the closing stock valuation
• Fixed asset register with purchase invoices
• Loan agreements and statements, and details of loans taken or repaid in cash
• TDS returns and challans, and Form 26AS
• Details of payments to relatives and associated concerns
• Previous year's audit report and return
• For F&O traders: contract notes and the broker's annual statement

We do not publish fees. The total depends on the work, and our team shares it in writing after reviewing your turnover, books and last year's report.

• Turnover and number of transactions
• Whether books are complete and reconciled when the audit starts
• Number of bank accounts, branches and stock locations
• Whether the business is also audited under another law
• Special areas: F&O trading, related party payments, foreign transactions
• Whether return filing and notice replies are included

Any tax, interest or penalty is paid by you directly to the government and is separate from our professional fees.

A Wholesale Trader Near the Limit

A wholesale trader's turnover crossed ₹1 crore for the first time. Most customers paid through bank transfers, but some suppliers were paid in cash. The work involved computing the cash share of receipts and payments, which turned out to be just over 5% on payments, so the audit was needed. For the next year, the trader moved supplier payments to bank transfers and stayed within the ₹10 crore limit without an audit.

A Software Professional With F&O Trading

A salaried software engineer traded futures and options and made a loss. He had earlier filed a return under the presumptive scheme for a freelance side income. The work involved computing F&O turnover under ICAI's method, checking the presumptive history and the income level, and deciding whether an audit applied before the return was filed.

A Partnership Firm With Late TDS

A partnership firm with turnover of several crores had deducted TDS on contractor payments but deposited some of it late, and had not deducted TDS on rent for a few months. The audit report had to show these points. Before signing, the firm deposited the outstanding amounts and corrected its TDS returns, so the report reflected the corrected position and the related disallowance was limited.

• Treating GST collected as part of turnover, or the reverse, inconsistently with the books
• Ignoring cash payments to suppliers when testing the 5% condition
• Assuming individuals have a different limit from firms and companies
• Leaving a presumptive scheme within the lock-in without noticing that an audit becomes necessary
• Filing the return before the audit report is uploaded and accepted
• Waiting until the last week, when corrections are no longer possible
• Not reconciling turnover in the books with GST returns
• Missing TDS defaults that the report must disclose
• Choosing a tax auditor who also writes the books

Companies

A company's accounts are already audited under the Companies Act, so it files Form 3CA (or Part C of Form 26) along with the statement of particulars, and needs both audits completed in time.

Charitable Trusts and Institutions

Trusts claiming exemption file a separate audit report in their own prescribed form, with its own due date, rather than a Section 44AB report.

Businesses With Transfer Pricing

Businesses with international or specified domestic transactions with associated enterprises also need a transfer pricing report, and their return is due on 30 November.

Loss-Making Businesses

A loss does not remove the tax audit requirement if turnover crosses the limit. Filing the audited return on time is also what allows the loss to be carried forward.

Businesses That Closed During the Year

A business that closes part-way through the year is still tested on the turnover of the months it operated. Closing stock, the sale of assets, the settlement of creditors and the final GST return all need care, and the books should be closed properly so that the last return can be filed with accurate figures.

• We are not the Income Tax Department; the report does not settle your assessment or stop a notice
• We do not sign a report without completing the checks the form requires
• We do not leave out disallowances or defaults the law requires us to report
• We do not write your books and then audit them
• We do not guarantee that no tax or interest will arise from the report
• We do not tie our fees to the outcome of the audit

If your business turnover is below ₹1 crore, or below ₹10 crore with almost all receipts and payments through banks, and you are not declaring less than the presumptive profit, you are outside Section 44AB. If you are a professional with receipts up to the presumptive limit and you declare at least half as profit, you need not have your accounts audited. In these cases, a properly prepared return – with a quick applicability check – is enough.

1. What was our total turnover or gross receipts, and how much was received or paid in cash?
2. Did we use a presumptive scheme in any of the last five years?
3. Are our accounts also audited under another law?
4. Who will sign the report, and what is the membership number?
5. Will the report be uploaded before 30 September, leaving time to correct errors?
6. What do you need from our accountant, and by when?

The audit gives the auditor full access to your books and transactions. As chartered accountants we follow ICAI's confidentiality rules: records are used only for the audit and the return, shared only with the engagement team, and disclosed only where the law requires.

• Turnover and cash share computed
• Presumptive history checked for five years
• Books closed and bank accounts reconciled
• GST turnover matched with the books
• TDS deducted and deposited, returns corrected
• Fixed asset register and depreciation schedule ready
• Stock valuation and quantities ready
• Related party payments listed
• Auditor appointed by July

Our only office is in Whitefield, Bengaluru. Tax audits are carried out mostly on records shared securely, with visits where stock or assets must be seen. We work with businesses in every state and agree in advance whether any visit is needed. We do not have offices in other cities.

What is the tax audit requirement under Section 44AB?

A business needs a tax audit if turnover exceeds ₹1 crore, or ₹10 crore when cash receipts and payments are each within 5%. A profession needs one if gross receipts exceed ₹50 lakh, and presumptive taxpayers declaring lower profits may also need one.

What is tax audit u/s 44AB?

It is the audit of books of account by a chartered accountant required by Section 44AB of the Income-tax Act, 1961. From tax year 2026-27, the same requirement is in Section 63 of the Income-tax Act, 2025.

What is the tax audit limit for individuals?

The same as for anyone else: ₹1 crore of business turnover (₹10 crore with cash within 5%) or ₹50 lakh of professional receipts. Salary, interest, rent and capital gains do not count as turnover.

What was the income tax audit limit for AY 2023-24?

₹1 crore for businesses, ₹10 crore where cash receipts and payments were each within 5%, and ₹50 lakh for professions.

What was the tax audit limit for AY 2023-24 for presumptive taxpayers?

Businesses under Section 44AD with turnover up to ₹2 crore and professionals under Section 44ADA with receipts up to ₹50 lakh needed no audit if they declared at least the presumptive profit.

How was tax audit applicability for AY 2023-24 decided?

By turnover or receipts, the share of cash transactions, and whether a lower profit than the presumptive rate was declared with income above the basic exemption limit.

What was the tax audit due date for FY 2022-23?

30 September 2023 for the audit report and 31 October 2023 for the return of audit cases.

What was the tax audit limit for AY 2022-23?

₹1 crore for businesses, ₹10 crore with cash within 5%, and ₹50 lakh for professions. The report was due on 7 October 2022 after extension.

What was the tax audit limit for AY 2021-22, and its due date?

₹1 crore (₹10 crore with cash within 5%) for businesses and ₹50 lakh for professions. The report's due date was finally extended to 15 February 2022.

Who is eligible to be a tax auditor?

A chartered accountant in practice who is independent of the business – not its employee, bookkeeper or internal auditor – and within ICAI's limit on the number of tax audits.

What is the tax audit due date for AY 2026-27?

The report was due by 21 October 2026 after extension, and returns for audit cases are due by 21 November 2026.

What is Form 26?

Form 26 replaces Forms 3CA, 3CB and 3CD for tax years beginning on or after 1 April 2026, under Section 63 of the Income-tax Act, 2025.

Does F&O trading need a tax audit?

Only if the F&O turnover, computed under ICAI's guidance, crosses the limit, or if a lower profit is declared after using a presumptive scheme and income exceeds the exemption limit.

Is a tax audit needed if the business made a loss?

Yes, if turnover crosses the limit. A loss does not remove the requirement.

What happens if the audit report is filed late?

A penalty can apply unless there is a reasonable cause for the delay, and the return may be treated as defective. File the report as soon as possible and keep a record of the reasons.

How much does a tax audit cost?

We do not publish fees. The total depends on turnover, the state of the books and special areas, and our team shares the exact total after reviewing your records and requirements.

Statutory Audit · Income Tax Return · Tax Planning · TDS and TCS Compliance · Bookkeeping and Accounting · Transfer Pricing · Tax Notices and Appeals

Share your turnover, cash summary and last year's report. Our team will confirm whether an audit applies, which form to use and the dates that matter for your year.

Contact Details

Office Address

IMAK Advisory, ITPL Main Rd, Pattandur Agrahara, Whitefield, Bengaluru, Karnataka 560066, India

Phone

+91 79798 50684 (call or WhatsApp)

Email

imakadvisoryteam@gmail.com

Sources: Income Tax Department, FAQs on Form 26 under Section 63 and Rule 47 (incometaxindia.gov.in); Income-tax Act, 1961, Section 44AB; CBDT Circulars 01/2022, 19/2022, 20/2022, 10/2024 and 13/2024 on due-date extensions (as listed by Taxmann and ABCAUS); CBDT extension for AY 2026-27 (News On AIR, 29 September 2026); ICAI announcement on the ceiling of 60 tax audits per partner (reported June 2025). Checked 2 November 2026.