Short answer. “Audit” means two different things, and people mix them up.
A tax audit is required under Section 44AB of the Income-tax Act when your turnover crosses a limit: ₹1 crore for business (₹10 crore if your cash dealings are 5% or less), or ₹50 lakh for a profession. It is reported in Form 3CA or 3CB with Form 3CD.
A statutory audit is required under company law for every company, whatever its turnover — and for LLPs above a size limit. That is a separate requirement from the tax audit.
The tax-audit report is due by 30 September, and missing it carries a penalty under Section 271B. We handle tax audits, statutory audits and the Form 3CD reporting for businesses across Mumbai and India.
Tax audit and statutory audit are not the same thing
This is the confusion that causes most trouble. The two audits come from different laws and apply for different reasons:
- A tax audit is an income-tax requirement under Section 44AB. It is triggered by your turnover or gross receipts, and it applies to proprietors, firms, LLPs and companies alike once they cross the limit.
- A statutory audit is a company-law requirement. Every company has to have one every year, regardless of turnover or profit, and LLPs need one above a size limit.
A private limited company over the turnover limit needs both: a statutory audit under the Companies Act and a tax audit under Section 44AB. A small proprietor may need only a tax audit, and only if turnover crosses the threshold.
Tax audit under Section 44AB: who must get one
| You are | Tax audit applies if |
|---|---|
| Business | Turnover above ₹1 crore in the year |
| Business, mostly digital | Threshold rises to ₹10 crore if both cash receipts and cash payments are 5% or less of the totals |
| Profession | Gross receipts above ₹50 lakh in the year |
| On presumptive tax (44AD) | You declare profit below 8% (6% for digital) and your income crosses the basic exemption limit |
| On presumptive tax (44ADA) | You declare profit below 50% and your income crosses the basic exemption limit |
The most missed case is the presumptive one. People assume that being under the turnover limit means no audit, but if you opt out of presumptive taxation and show a lower profit, the audit is triggered even on a small turnover.
Turnover is not always obvious
For traders in derivatives, shares or commodities, “turnover” is computed in a specific way that is not your contract value. Getting that calculation wrong is how people either miss an audit they needed or do one they did not. This is worth checking before you assume you are clear.
Which form: 3CA, 3CB and 3CD
The tax-audit report has two parts: the audit report itself, and a detailed statement of particulars called Form 3CD. Which report form goes with it depends on whether your accounts are already audited under another law.
| Form | When it applies |
|---|---|
| Form 3CA + 3CD | Accounts already audited under another law (for example, a company audited under the Companies Act) |
| Form 3CB + 3CD | Accounts not audited under any other law (for example, a proprietorship or firm) |
Form 3CD runs to dozens of clauses covering payments, TDS, loans, depreciation, disallowances and more. It is where most scrutiny later begins, so the quality of the 3CD reporting matters as much as the audit itself.
Statutory audit: companies and LLPs
- Companies (Private Limited, Public, OPC) must have a statutory audit every year under the Companies Act 2013, no matter how small. The auditor is appointed under Section 139 and reports under Section 143.
- LLPs need a statutory audit only if turnover exceeds ₹40 lakh or the partners’ contribution exceeds ₹25 lakh.
So a brand-new company with almost no revenue still needs a statutory audit, while an LLP below those limits does not. The two regimes are genuinely different, and getting it wrong means either a missed filing or an audit you did not need.
The deadlines and the penalty
- Tax-audit report: due by 30 September following the financial year.
- Income-tax return (for audit cases): due by 31 October.
- Penalty for not getting a required tax audit (Section 271B): 0.5% of turnover or gross receipts, up to a maximum of ₹1,50,000. It can be waived only if there was a reasonable cause.
Dates shift when the department grants extensions, so confirm the current deadline for your year before you plan around it.
Other audits you may also need
- GST audit: a reconciliation statement in Form GSTR-9C, self-certified, if your GST turnover is above ₹5 crore.
- Internal audit: mandatory for certain classes of companies under Section 138 of the Companies Act.
- Housing society audit: statutory audit under Section 81 of the Maharashtra Co-operative Societies Act 1960.
- Trust and NGO audit: under Section 12A(1)(b) read with Rule 17B for entities registered under Section 12AB.
The mistakes that cause trouble
- Assuming a small turnover means no audit, while sitting on a presumptive opt-out that triggers one.
- Computing derivatives or trading turnover wrongly, and landing on the wrong side of the limit.
- Forgetting that a company needs a statutory audit even with zero revenue.
- Treating Form 3CD as a formality, then facing questions on its clauses at scrutiny.
- Missing the 30 September date and inviting the Section 271B penalty.
Not sure whether you need an audit, or whose deadline is next?
We check applicability, compute turnover correctly, and complete tax audits, statutory audits, the Form 3CD reporting and GST reconciliation before the deadline. See our audit and assurance services, or talk to CA Vijay directly. Written scope and fee before any work begins.
Message CA Vijay on WhatsApp Contact the officeFrequently asked questions
What is the tax audit limit for FY 2025-26?
Turnover above ₹1 crore for a business (or ₹10 crore where both cash receipts and cash payments are 5% or less of the totals), and gross receipts above ₹50 lakh for a profession. A presumptive opt-out can trigger an audit below these limits.
Is a tax audit the same as a statutory audit?
No. A tax audit is an income-tax requirement under Section 44AB, triggered by turnover. A statutory audit is a company-law requirement that applies to every company regardless of turnover, and to LLPs above a size limit. A company over the turnover limit needs both.
What is the difference between Form 3CA, 3CB and 3CD?
Form 3CD is the detailed statement of particulars filed in every tax audit. It goes with Form 3CA when the accounts are already audited under another law (such as a company under the Companies Act), or with Form 3CB when they are not (such as a proprietorship or firm).
Does a small private limited company need an audit?
Yes. Every company needs a statutory audit under the Companies Act 2013 every year, regardless of turnover or profit. A tax audit under Section 44AB applies on top only if it crosses the turnover limit.
When is the tax audit due, and what is the penalty for missing it?
The report is due by 30 September and the income-tax return for audit cases by 31 October. The penalty under Section 271B is 0.5% of turnover or gross receipts, up to a maximum of ₹1,50,000, unless there was a reasonable cause.
Do LLPs need a statutory audit?
Only if turnover exceeds ₹40 lakh or the partners’ contribution exceeds ₹25 lakh. Below both limits, an LLP does not need a statutory audit, though a tax audit can still apply on turnover.
Related guides and services
- Audit and assurance services — tax audit, statutory audit, GST reconciliation and internal audit.
- Startup tax exemption: DPIIT, Section 80-IAC & angel tax.
- NRI selling property in India: TDS under Section 195.
This guide is general information, not audit or tax advice for your specific case. Limits and dates follow the Income-tax Act 1961 as in force for the relevant year; from 1 April 2026 the Income-tax Act 2025 applies and re-numbers several provisions, so confirm the section and the current deadline for your assessment year. Vijay R Singh & Co., Chartered Accountants.
