Tax Audit (Section 44AB)

Overview

A tax audit is an independent examination of a taxpayer's books by an authorised professional, required by section 44AB of the Income Tax Act when turnover or receipts cross set limits. The auditor checks that books are kept properly and that income, deductions, TDS and other tax particulars are reported correctly, then files a report on the income tax portal. The report is an input to your return, and the return cannot be filed without it when audit applies. A tax audit is not the same as a statutory audit under the Companies Act, although one auditor often does both.

Who needs it

Audit is triggered by turnover or receipts, or by the way you choose to be taxed.

Taxpayer	When tax audit applies
Business	Turnover above Rs 1 crore in the year
Business with mostly digital dealings	Threshold rises to Rs 10 crore where cash receipts and payments stay within the limit set by law
Profession	Gross receipts above Rs 50 lakh
Presumptive taxpayer	Opting out of presumptive taxation under 44AD, 44ADA or 44AE can bring audit in, depending on income

Companies, LLPs, firms, proprietors and professionals are all covered. Even when a company must also have a statutory audit, the tax audit report is a separate filing.

What Zenith does

Zenith listens first, confirms whether audit really applies to you, and explains the scope. A relationship manager is assigned and an assignment-specific checklist is shared. The audit itself is performed only by an authorised professional who is eligible under the applicable rules and holds a valid registration on the income tax portal. Zenith's team:

• Tests applicability using turnover, cash ratio and presumptive status.
• Collects books and reviews the trial balance, ledgers and supporting records.
• Checks TDS and TCS compliance, GST reconciliation, loans and deposits, cash payments, depreciation and related party dealings.
• Raises queries with you and agrees on corrections before the report is finalised.
• Prepares Form 3CA or 3CB with Form 3CD and uploads it.
• Walks you through accepting the report on the portal and carrying its numbers into the return.

The auditor forms an independent opinion. Zenith does not promise a particular finding.

Eligibility and key rules

• Form 3CA is used when your accounts are already audited under another law, such as a company's statutory audit. Form 3CB is used when they are not.
• Form 3CD is the statement of particulars attached to either. It runs to more than 40 clauses on items such as loans, depreciation, payments to specified persons, TDS and quantitative details.
• Only an authorised professional can sign the report. The taxpayer then reviews and accepts it on the portal.
• Books of account must be maintained as the law requires. Poor records make the audit slower and the report more likely to carry qualifications.
• Audit-case return deadlines differ from non-audit cases (see the next sections).

Documents required

• PAN of the entity and details of partners, directors or the proprietor.
• Balance sheet and profit and loss account, with schedules and notes, or the trial balance if finalisation is pending.
• Ledgers and day books from your accounting software.
• Sales and purchase registers.
• Bank statements for all accounts and bank reconciliations.
• GST returns and reconciliation of turnover with books.
• TDS and TCS challans, returns and certificates, and Form 26AS.
• Fixed asset register with the depreciation schedule.
• Loan agreements, statements and confirmations.
• Salary and payroll registers, and statutory dues.
• Previous year's tax audit report and Form 3CD.
• Partnership deed, LLP agreement or incorporation documents where relevant.

Process and timeline

1. Applicability check and scope agreed, with the quotation.
2. Records shared through the request form and the checklist.
3. Auditor reviews, raises queries and agrees adjustments.
4. Draft Form 3CA or 3CB and Form 3CD is shared with you.
5. The report is uploaded by the auditor on the portal.
6. You accept it on the portal.
7. Your return is filed with the audit report details, and you retain the working papers summary.

How long it takes depends on completeness of records, size of the business, number of branches and the speed of query responses. Audit work is best started well before the due date.

Government fees, penalties and due dates

• The audit report is generally due by 30 September following the financial year, and the CBDT may extend the date in some years.
• For audit cases the return due date is later than for non-audit cases. The sources read show 31 October for firms, LLPs and companies needing audit, and 30 November for transfer pricing cases.
• The penalty for not getting the audit done or not filing the report is under section 271B: 0.5% of turnover or gross receipts, capped at Rs 1,50,000.
• There is no government filing fee for uploading the report. Professional fees are customised, and any government fees are shown separately in the quotation.
• The Income-tax Act, 2025 applies to tax years starting 1 April 2026 and renumbers sections. Zenith applies the Act governing the year being audited.

Amounts and dates above reflect public sources read in October 2026 and change with notifications, so Zenith confirms the current figures in your quotation.

Common mistakes

• Assuming audit is not needed because the profit is small. The test is turnover or receipts.
• Starting in September, when records are incomplete and the auditor has little time.
• Not reconciling GST turnover with books.
• Missing TDS on rent, professional fees or contractors, which leads to disallowance and clause reporting.
• Large cash payments and cash loans that the report must show.
• Forgetting to accept the report on the portal before filing the return.
• Changing books after the auditor has finalised them.

FAQs