Tax Audit under Section 44AB

Sec 44AB, IT Act 1961 (≡ §63, IT Act 2025) mandates a tax audit if: (a) business turnover exceeds ₹1 crore (cash) or ₹10 crore (≥95% digital receipts and payments); (b) professional gross receipts exceed ₹50 lakh; or (c) a taxpayer opts out of presumptive taxation under Sections 44AD/44ADA and declares income below the presumptive threshold. Finance Act 2021 introduced the ₹10 crore digital threshold.

Form 3CA is the audit report for taxpayers already audited under another law (e.g., Companies Act); Form 3CB is for all others. Both attach Form 3CD — the 44-clause detailed statement covering depreciation, related-party payments, MSME dues, TDS defaults, and more. The CA signs all three with a UDIN on the income tax portal.

The tax audit report must be filed on or before 30 September of the assessment year (31 October if Form 3CEB also applies). Late filing attracts a penalty of 0.5% of turnover under Section 271B, subject to a maximum of ₹1.5 lakh. The penalty can be waived only on a showing of reasonable cause before the AO.

Clause 26 (Section 43B — PF/ESIC/bonus paid after due date: disallowed), Clause 21 (Section 40A(2) — payments to related parties above market rate), Clause 34 (Section 40a(ia) — 30% disallowance for TDS defaults), and Clause 44 (GST expense breakup) are the most frequently used as bases for scrutiny assessment notices.

Yes. Sec 44AB, IT Act 1961 (≡ §63, IT Act 2025) applies equally to LLPs, partnership firms, and individuals. ITR-5 filers use the same Form 3CB + 3CD. LLPs are additionally subject to Alternate Minimum Tax under Section 115JC — the tax audit report should reconcile adjusted total income for AMT purposes.