Tax Audit Section 44AB AY 2026-27: Who Must File by Sep 30
The tax audit report under Section 44AB for FY 2025-26 (AY 2026-27) is due on September 30, 2026. Here's who is covered — businesses over ₹1 crore, professionals over ₹50 lakh, and presumptive-scheme opt-out cases — and what happens if you miss it.
CA Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Legal basis: Section 44AB, Income Tax Act, 1961, read with Rule 6G of the Income Tax Rules, 1962 — Effective: ongoing (thresholds amended by Finance Act 2021; LLP presumptive scheme extended by Finance Act 2024). Source: incometax.gov.in. Last reviewed by CA Harun Raaj: September 2026.
September 30, 2026 is the due date for the tax audit report for FY 2025-26 (AY 2026-27) under Section 44AB of the Income Tax Act, 1961. Miss it, and the penalty clock under Section 271B starts running — and since the tax audit report must be filed before the ITR itself, a delay here puts your ITR filing at risk too.
This guide sets out who must get a tax audit done, what the audit covers, and what the penalty looks like if the deadline is missed.
What is a tax audit under Section 44AB?
A tax audit is a mandatory examination and certification of a taxpayer's books of accounts by a Chartered Accountant. Unlike a statutory audit under the Companies Act, a tax audit under Section 44AB is required by the Income Tax Act itself, independently of whether the business is a company, LLP, partnership, or sole proprietorship.
The CA's role goes beyond checking whether the accounts are correct. The audit culminates in Form 3CD — a detailed Statement of Particulars covering turnover computation, TDS compliance, capital gains, related-party transactions, payments above prescribed limits, and more. It functions as a comprehensive tax compliance report that the Assessing Officer relies on.
Key point: A tax audit under Section 44AB is mandatory once turnover crosses ₹1 crore (business) or ₹50 lakh (profession) for FY 2025-26, with the audit report due by September 30, 2026.
Who must get a tax audit — the Section 44AB thresholds
Businesses: If total sales, turnover, or gross receipts exceed ₹1 crore in FY 2025-26, a tax audit is mandatory.
Digital transaction exception: If the aggregate of cash receipts and the aggregate of cash payments each do not exceed 5% of total receipts and total payments respectively, the threshold rises to ₹10 crore (proviso to Section 44AB(a), inserted by Finance Act 2021, effective from AY 2021-22). Both the receipts side and the payments side must independently stay within 5% — meeting only one side is not enough.
Professions: If gross receipts from a profession (doctors, lawyers, engineers, CAs, architects, and similar) exceed ₹50 lakh in FY 2025-26, a tax audit is required under Section 44AB(b). This threshold was enhanced from ₹25 lakh by Finance Act 2021.
Presumptive taxation opt-out cases: A tax audit is mandatory even below these thresholds if:
- A business was eligible for presumptive taxation under Section 44AD (turnover up to ₹3 crore, or ₹3.75 crore with digital transactions), but declared profit below the presumptive rate of 8% (6% for digital receipts).
- A profession was eligible for Section 44ADA, but declared profit below 50% of gross receipts.
Once a taxpayer opts out of Section 44AD in any year, Section 44AB applies for five consecutive assessment years from the year of opt-out under Section 44AD(4) and 44AD(5) — even if turnover stays below ₹1 crore in the intervening years.
Illustration: A Jaipur-based trading business with turnover of ₹2.8 crore in FY 2025-26, receiving 85% of payments digitally and paying suppliers 92% digitally, is still covered by the base ₹1 crore threshold — the ₹10 crore digital exemption is irrelevant here since turnover already crosses ₹1 crore. This example is illustrative only.
Forms used for a tax audit
Form 3CD, the Statement of Particulars, is the core of the tax audit. It covers turnover, gross profit, TDS, payments to related parties, expenditure disallowances, depreciation, and related clauses. The signing CA completes this in full with their Digital Signature Certificate before uploading it on the e-filing portal.
The September 30, 2026 deadline
Section 44AB, read with Rule 6G of the Income Tax Rules, 1962, requires the tax audit report to be filed by 30 September of the relevant assessment year. For AY 2026-27 (FY 2025-26), the due date is September 30, 2026.
This is the due date for the audit report, not the ITR. For assessees required to get a tax audit, the ITR due date is October 31, 2026 — but the audit report must be filed before the ITR, so 30 September is the real gate. Transfer pricing cases involving international transactions and Form 3CEB have an audit report due date of October 31, 2026.
Penalty for missing the deadline — Section 271B
If the audit is not completed or the report is not furnished by 30 September 2026, the Assessing Officer may levy a penalty under Section 271B of 0.5% of total turnover or gross receipts, subject to a maximum of ₹1,50,000.
The penalty is discretionary. If the taxpayer can show "reasonable cause" — a genuine reason such as illness, a partner dispute, or unusual business circumstances — no penalty is levied under Section 273B. This defence requires documentation and is not automatic; even one day's delay can trigger penalty proceedings.
What to do before September 30, 2026
- Confirm applicability by checking FY 2025-26 turnover against the ₹1 crore (business) or ₹50 lakh (profession) threshold, and factor in any presumptive opt-out history.
- Engage your CA promptly — a tax audit requires examination and certification of accounts, which takes time to complete properly.
- Prepare books of accounts: reconcile entries, close outstanding items, prepare a trial balance, and have TDS reconciliation (Form 26AS / AIS) ready.
- Provide TDS certificates, bank statements, and loan schedules that the CA needs for Form 3CD.
- Ensure the signing CA's Digital Signature Certificate is active, since Form 3CA/3CB must be uploaded with a valid DSC on the e-filing portal.
I'm CA Harun Raaj, Visakhapatnam. If your FY 2025-26 turnover is anywhere near these thresholds, reach out to us before September 30 so your tax audit and Form 3CD are filed on time.
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See Also
Frequently Asked Questions
Who needs a tax audit under Section 44AB for AY 2026-27?
Businesses with turnover exceeding ₹1 crore in FY 2025-26 and professionals with gross receipts exceeding ₹50 lakh must get a tax audit under Section 44AB(a) and 44AB(b). The ₹1 crore threshold rises to ₹10 crore only if cash receipts and cash payments each stay within 5% of total receipts and payments.
My turnover was ₹1.02 crore but 95% of transactions are digital. Do I still need an audit?
Yes. The digital transaction exemption raises the threshold to ₹10 crore under the proviso to Section 44AB(a), but that limit only matters if turnover is between ₹1 crore and ₹10 crore with cash transactions within 5% on both sides. Since your turnover already crosses ₹1 crore, an audit is required regardless of the digital exemption.
I opted out of Section 44AD last year and my turnover this year is ₹60 lakh. Do I need a tax audit?
Possibly yes. Under Section 44AD(4) and 44AD(5), opting out of the presumptive scheme in a prior year triggers Section 44AB applicability for five consecutive assessment years from that year, even if turnover stays below ₹1 crore. Confirm the exact year of opt-out with your CA before assuming you are exempt.
What is the penalty for missing the September 30, 2026 tax audit deadline?
Under Section 271B, the Assessing Officer may levy a penalty of 0.5% of total turnover or gross receipts, capped at ₹1,50,000. The penalty is discretionary, and Section 273B allows relief if reasonable cause for the delay is shown and documented.
Is the tax audit report due date the same as the ITR due date?
No. The Section 44AB audit report for AY 2026-27 is due September 30, 2026, while the ITR due date for taxpayers requiring a tax audit is October 31, 2026. The audit report must be filed before the ITR, which makes the September 30 date the practical deadline to track.
Does an LLP with turnover of ₹2.5 crore need a tax audit?
Finance Act 2024 extended Section 44AD presumptive taxation to LLPs from AY 2024-25, so an LLP declaring income at or above the presumptive rate with cash transactions within 5% can opt for 44AD and avoid the 44AB audit. If the LLP does not opt for 44AD, the base ₹1 crore turnover threshold under Section 44AB applies and an audit is required.
What forms does my CA file for a tax audit?
If accounts are already audited under another law such as the Companies Act, the CA files Form 3CA along with Form 3CD; in all other cases, such as proprietorships, partnerships, and LLPs not audited elsewhere, Form 3CB is used with Form 3CD. Form 3CD is the detailed Statement of Particulars that the CA must complete and upload with a valid Digital Signature Certificate.
Is there a grace period if the audit report is filed one day late?
No. Even a one-day delay past September 30, 2026 can trigger penalty proceedings under Section 271B, though the taxpayer may claim reasonable cause relief under Section 273B if properly documented. There is no automatic grace period built into Section 44AB.
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