When is tax audit triggered?
Source: Section 44AB of the Income-tax Act, 1961.
- **Business** — total sales / turnover / gross receipts exceeds **Rs. 1 crore** in the previous year.
- **Business with low cash transactions** — turnover threshold is **Rs. 10 crore**, provided aggregate cash receipts AND aggregate cash payments each do not exceed **5% of total receipts / payments**.
- **Profession** — gross receipts exceed **Rs. 50 lakh** in the previous year.
- **Presumptive scheme — Section 44AD opted out** — business income reported is **lower** than the presumptive percentage AND total income exceeds the basic exemption limit; tax audit becomes mandatory.
- **Section 44ADA (profession)** — same trigger pattern; if income reported is below 50% of gross receipts and total income exceeds the exemption limit.
Which audit report — 3CA or 3CB?
- **Form 3CA** — when the assessee is **already required to get the accounts audited under any other law** (e.g., a company under the Companies Act, an LLP whose turnover crosses the LLP audit threshold). The 3CA references the audit already conducted under the other law.
- **Form 3CB** — when there is **no other statutory audit**; the tax-audit CA expresses an opinion on the financial statements themselves.
Both 3CA and 3CB are filed together with Form 3CD — the "statement of particulars" containing 44+ clauses covering accounting method, depreciation, deductions, TDS compliance, GST compliance, related-party transactions, foreign transactions, expenses disallowable under Section 40 / 40A / 43B, and more.
Statutory due date
The tax audit report must be filed by 30 September of the assessment year (i.e., one month before the ITR due date for tax-audit cases, which is 31 October). For transfer-pricing cases under Section 92E, both the audit report and the ITR have later due dates (30 November for the ITR).
The CBDT frequently extends these dates around the September / October peak filing season. Always check the latest notification on incometaxindia.gov.in or incometax.gov.in.
What a clean tax audit engagement looks like
A typical end-to-end timeline for a mid-sized company audit:
- **T-90 days** — Engagement letter signed; preliminary planning meeting; agreed list of working papers and lead schedules; identification of new transactions / accounting changes since last year
- **T-60 days** — Trial balance lock; opening of audit field-work; sample selection
- **T-45 to T-30 days** — Detailed substantive testing of P&L and balance-sheet items; vouching of high-value / unusual transactions; TDS / GST compliance check; related-party transaction review
- **T-15 days** — Draft Form 3CD circulated to client for confirmation; resolution of open items
- **T-7 days** — Final review by partner; signed report uploaded to the e-filing portal; acknowledgement archived
- **T-day** — Form 3CD + 3CA / 3CB filed; ITR filing window opens for the company
Common 3CD clauses that trip up clients
The clauses that consistently need the most attention:
- **Clause 21** — Disallowance under Section 40(a)(ia) for TDS defaults
- **Clause 26** — Section 43B — payments deductible only on actual payment basis (statutory dues, leave encashment, bonus, etc.). Pay attention to **Section 43B(h)** — payments to MSMEs beyond the time-frame fixed by the MSMED Act are disallowed in the year of accrual until paid
- **Clause 31** — Loans / deposits accepted or repaid in cash above Section 269SS / 269T thresholds
- **Clause 34** — TDS compliance summary
- **Clause 44** — GST reconciliation between books and GSTR returns
Engaging us
We conduct tax audits across sectors including manufacturing, trading, professional firms, NGOs, and services. Our engagement model emphasises early closure of working papers — we rarely accept engagements that begin in September for a 30 September due date. If you'd like to engage us for the FY 2025-26 tax audit cycle, please reach out by August so the calendar can be planned.