Tax Audit under Section 44AB of the Income Tax Act, 1961

Section 44AB of the Income Tax Act, 1961 provides for mandatory audit of accounts for certain persons carrying on business or profession. As per Section 44AB(a), every person carrying on business is required to get his accounts audited if total sales, turnover or gross receipts exceed ₹1 crore (or ₹10 crore w.e.f. AY 2021-22 if cash receipts and payments do not exceed 5% of total turnover/gross receipts). For persons carrying on profession, Section 44AB(b) mandates audit if gross receipts exceed ₹50 lakhs. The auditor furnishes Form 3CA or Form 3CB, and Form 3CD per Rule 6G(2). Form 3CD contains 44 clauses covering method of accounting, ICDS compliance, TDS, GST (Clause 31), Section 269ST, GAAR under Chapter X-A, and Specified Financial Transactions. Due date: 30 September of the assessment year per Section 139(1) proviso. Penalty under Section 271B: 0.5% of turnover, maximum ₹1,50,000. CBDT Notification No. 33/2018 dated 20 August 2018 substantially revised Form 3CD.

Section 44AB of the Income Tax Act, 1961 mandates a tax audit for any person carrying on business if their total sales, turnover or gross receipts exceed ₹1 crore in the previous year (or ₹10 crore if cash transactions are 5% or less of total turnover), or for any person carrying on a profession if their gross receipts exceed ₹50 lakhs. The audit must be conducted by a Chartered Accountant who is required to sign Form 3CA (if the accounts have already been audited under any other law) or Form 3CB (in other cases), along with Form 3CD which is a statement of particulars containing 44 clauses. The due date is 30 September of the assessment year. Form 3CD was substantially revised by CBDT Notification No. 33/2018 dated 20 August 2018, adding GST, GAAR, Section 269ST, and SFT clauses. Non-compliance attracts penalty under Section 271B at 0.5% of turnover, maximum ₹1,50,000.