When an audit applies, the forms and deadlines, and the penalty for missing it
A tax audit under Section 44AB is an examination of your accounts by a Chartered Accountant, reported to the department. It applies when business turnover exceeds Rs 1 crore (raised to Rs 10 crore where both cash receipts and cash payments are 5% or less), when professional gross receipts exceed Rs 50 lakh, or when you declare profit below the presumptive deemed rate and your income is taxable. The CA reports in Form 3CA or 3CB with the detailed 3CD. The audit report is due by 30 September and the return by 31 October. Missing the audit attracts a penalty under Section 271B of 0.5% of turnover, up to Rs 1.5 lakh.
Last reviewed:
Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact Income Tax Department. Read our editorial scope →
When a tax audit applies
Audit applicability turns on turnover, the cash proportion, and whether you declare below the presumptive deemed profit.
Section 44AB tax-audit triggers
Situation
Threshold
Business (general)
Turnover over Rs 1 crore
Business with cash receipts and payments each 5% or less
A Chartered Accountant conducts the audit and files the report electronically: Form 3CA where the accounts are already audited under another law (such as a company), or Form 3CB otherwise, in each case with the detailed statement of particulars in Form 3CD. The audit report is due by 30 September following the tax year, and the income-tax return for an audit case is due by 31 October. You must accept the uploaded report on the portal for it to be valid.
tipEngage your CA well before the 30 September audit deadline. The 3CD has extensive particulars (TDS, payments, loans, disallowances), and assembling them late is where errors and delays creep in.
The penalty for missing it
If you were required to get a tax audit and did not, Section 271B imposes a penalty of 0.5% of total turnover or gross receipts, capped at Rs 1.5 lakh. The penalty can be waived where there was reasonable cause. The bigger point is that a tax audit is also the gateway to other obligations (for example, becoming a TDS deductor in the following year), so getting it done on time keeps the rest of your compliance in order.
warningBeing tax-audited in one year generally makes you a TDS deductor in the next under the main sections. So an audit is not just a one-off, it can switch on ongoing deduction duties.
Income-tax Act 1961 s.271B (penalty for failure to get audited)
Income-tax Rules (Forms 3CA/3CB and 3CD)
Frequently asked questions
When do I need a tax audit under Section 44AB?+
When business turnover exceeds Rs 1 crore (or Rs 10 crore where both cash receipts and cash payments are 5% or less), when professional gross receipts exceed Rs 50 lakh, or when you declare profit below the presumptive deemed rate and your income is taxable. A valid presumptive taxpayer within the limits is usually outside the audit requirement.
What forms does a tax audit use?+
A Chartered Accountant files Form 3CA (where accounts are audited under another law, such as a company) or Form 3CB (otherwise), together with the detailed statement of particulars in Form 3CD. You then accept the uploaded report on the portal. The audit report is due by 30 September and the return by 31 October.
What is the penalty for not getting a tax audit?+
Section 271B imposes a penalty of 0.5% of turnover or gross receipts, capped at Rs 1.5 lakh, where you were required to get an audit and did not. It can be waived for reasonable cause. Beyond the penalty, missing the audit disrupts the rest of your compliance and any dependent obligations.
Does a tax audit make me a TDS deductor?+
Usually, yes, in the following year. Being subject to a tax audit in the preceding year is what generally makes an individual or HUF liable to deduct TDS under the main sections (194C, 194J and the rest). So crossing the audit threshold switches on ongoing TDS-deduction duties as well.