Audit Under the Income Tax Act

Q: What is the difference between Form 3CA and Form 3CB?

Form 3CA is used when accounts are already audited under another law. Form 3CB is used when accounts are not audited under any other law. Both are accompanied by Form 3CD.

Q: What happens if a tax audit is not conducted when required?

Failure to get accounts audited when required can attract a penalty calculated as a percentage of turnover or a fixed amount, subject to showing reasonable cause.

Q: Is tax audit the same as statutory audit?

No. A statutory audit examines the true and fair view of financial statements as a whole, while a tax audit focuses on verifying compliance with tax provisions and accurate income computation.

Tax Audit Compliance for Businesses and Professionals

A tax audit under the Income Tax Act is mandatory for businesses and professionals whose turnover or gross receipts exceed prescribed thresholds. The audit verifies that books of account are properly maintained and that income has been correctly computed in accordance with tax laws, helping prevent under-reporting and disputes with tax authorities.

Our tax audit services ensure accurate computation, proper documentation, and timely filing of the audit report. This complements our statutory audit under the Companies Act and supports clients who also require trust audits or LLP audits as part of their overall compliance.

Our Income Tax Act Audit Services

Tax Audit Execution

Conducting the tax audit and preparing the audit report in the prescribed format under the Income Tax Act.

Applicability Assessment

Assessing whether tax audit provisions apply to your business or profession based on turnover and other criteria.

Books of Account Review

Reviewing the maintenance and accuracy of books of account as required for tax audit purposes.

Presumptive Taxation Advisory

Guidance on presumptive taxation schemes and when tax audit obligations may still apply.

Form 3CA/3CB & 3CD Filing

Preparing and filing the requisite tax audit forms and detailed statement of particulars.

Disallowance Risk Review

Identifying expenses or transactions at risk of disallowance and advising on corrective treatment.

Our Approach

Determining tax audit applicability based on turnover and business nature
Reviewing books of account, vouchers, and supporting financial records
Verifying compliance with TDS, depreciation, and other tax provisions
Preparing the tax audit report and detailed statement of particulars
Filing the audit report electronically within the prescribed timeline

Benefits of a Properly Conducted Tax Audit

Ensures compliance with mandatory tax audit provisions and deadlines
Reduces the risk of penalties for under-reporting or non-compliance
Identifies discrepancies in books of account before tax assessment
Strengthens the accuracy and credibility of income computation
Provides a documented basis for responding to tax department queries
Supports better financial discipline within the business

Why Choose Us?

Strong understanding of tax audit applicability rules and exceptions
Meticulous review of books of account to minimise disallowance risk
Timely preparation and filing of all required tax audit forms
Coordinated support with broader audit and assurance services
Practical guidance to prevent future compliance issues

Frequently Asked Questions

Who is required to undergo a tax audit under the Income Tax Act?

Businesses whose turnover exceeds the prescribed threshold, and professionals whose gross receipts exceed the applicable limit, are required to undergo a tax audit. Certain taxpayers under presumptive taxation schemes may also need a tax audit if they declare income below the prescribed presumptive rate.

What is the difference between Form 3CA and Form 3CB?

Form 3CA is used when the taxpayer's accounts are already audited under another law, such as the Companies Act, while Form 3CB is used when the accounts are not audited under any other law and the tax audit is the only audit being conducted. Both are accompanied by Form 3CD, the detailed statement of particulars.

What happens if a tax audit is not conducted when required?

Failure to get accounts audited when required under the Income Tax Act can attract a penalty, generally calculated as a percentage of turnover or a fixed amount, whichever is lower, subject to the taxpayer being able to show reasonable cause for the failure.

Is tax audit the same as statutory audit?

No. A statutory audit under the Companies Act examines the true and fair view of financial statements as a whole, while a tax audit under the Income Tax Act focuses specifically on verifying compliance with tax provisions and accurate computation of taxable income. A company may require both audits.

When is the tax audit report due to be filed?

The tax audit report must generally be filed before the due date for filing the income tax return for taxpayers subject to audit, which is typically earlier than the standard return filing deadline for non-audit cases. Specific dates are notified each year by the tax department.

Ensure Accurate, Timely Tax Audit Compliance

Professional tax audit services to keep your business compliant with the Income Tax Act.