Income Tax Audit Services

Q: Who is required to get an income tax audit under Section 44AB?

Businesses with turnover exceeding ₹1 crore (₹10 crore if cash transactions are below 5%) and professionals with gross receipts exceeding ₹50 lakh (₹75 lakh if cash transactions are minimal) must get a tax audit. Assessees opting out of presumptive taxation with income below prescribed limits are also required.

Q: Is a separate income tax audit required if the company already has a statutory audit?

Yes. A statutory audit and an income tax audit under Section 44AB serve different purposes. Both can be conducted by the same CA. Where accounts are already audited under another law, Form 3CA is used instead of Form 3CB.

Q: What are the consequences of filing an incorrect or incomplete Form 3CD?

An incorrect Form 3CD can trigger scrutiny assessment, addition of income or disallowances, and penalty under Section 270A or 271(1)(c) for concealment or misreporting of income. The auditor may also face professional consequences.

Comprehensive Tax Audit Under Section 44AB — Accurate, Complete, and Filed on Time

An income tax audit under Section 44AB of the Income Tax Act, 1961 is a mandatory examination of the books of accounts of businesses and professionals whose gross receipts or turnover exceed the prescribed thresholds. It is conducted by a Chartered Accountant and results in the submission of an audit report in Form 3CA or Form 3CB along with the statement of particulars in Form 3CD.

A properly conducted income tax audit does more than satisfy a compliance obligation — it identifies disallowable expenses, verifies the correctness of deductions claimed, and significantly reduces the risk of scrutiny assessments and demand notices. Our income tax audit services cover all categories of taxpayers including companies, LLPs, firms, and individuals. This page specifically covers income tax audit as a service; for the statutory framework and applicability, see our audit under the Income Tax Act page. We also cover related GST audit and audit and assurance services for businesses with broader compliance requirements.

Our Income Tax Audit Services

Section 44AB Tax Audit

Conducting the mandatory tax audit for businesses and professionals exceeding the prescribed turnover or gross receipt thresholds, with full Form 3CD preparation and certification.

Form 3CA / 3CB Certification

Preparation and certification of Form 3CA where accounts are already audited under another law, or Form 3CB where no other statutory audit is mandated.

Form 3CD — All 44 Clauses

Thorough preparation of all 44 clauses of Form 3CD covering depreciation, payments, deductions, TDS, loans, deemed income, and all other prescribed disclosures.

Books of Accounts Review

Verification that books of accounts are maintained correctly under Section 44AA and are consistent with Income Tax Act requirements for the relevant category of taxpayer.

Deductions & Disallowances Review

Verification of deductions claimed under Sections 10A, 10AA, 80-IC, 80G, and Chapters VI-A, and identification of expenses likely to be disallowed under Sections 40, 40A, and 43B.

Presumptive Taxation Assessment

Assessment of applicability and compliance with presumptive taxation schemes under Sections 44AD, 44ADA, and 44AE, including the income tax audit trigger where declared profits fall below prescribed limits.

Benefits of a Thorough Income Tax Audit

Avoids penalty of 0.5% of turnover (up to ₹1,50,000) under Section 271B for non-filing
Reduces the risk of scrutiny assessments and demand notices from the Income Tax Department
Identifies disallowable expenses and incorrect deductions before they trigger tax demands
Ensures Form 3CD is accurately and completely prepared across all 44 clauses
Confirms correct TDS compliance, advance tax computation, and payment records
Provides a complete and defensible audit trail for assessments and appeals

Frequently Asked Questions

Who is required to get an income tax audit under Section 44AB?

Businesses with total sales, turnover, or gross receipts exceeding ₹1 crore (₹10 crore if cash transactions do not exceed 5% of total receipts and payments) and professionals with gross receipts exceeding ₹50 lakh (₹75 lakh if cash transactions are minimal) are required to have their accounts audited under Section 44AB. Additionally, assessees opting out of presumptive taxation schemes with income declared below the prescribed rate are also required to get a tax audit done.

What is the due date for submitting the income tax audit report?

The income tax audit report must generally be furnished on or before 30 September of the assessment year for non-transfer pricing cases. For assessees covered under transfer pricing provisions, the due date is 31 October. The Central Board of Direct Taxes (CBDT) may extend these dates by notification for specific assessment years — it is important to track any such extensions applicable to your filing year.

What expenses are most commonly disallowed during an income tax audit?

Commonly disallowed expenses include: cash payments exceeding ₹10,000 per day to a single person (Section 40A(3)); unpaid statutory liabilities such as PF, ESI, and GST not paid before the due date of filing the return (Section 43B); payments to related parties in excess of market value; expenditure not incurred wholly and exclusively for the purpose of business; and depreciation claimed on assets not actually used in the business or claimed at incorrect rates.

Is a separate income tax audit required if the company already has a statutory audit?

Yes. A statutory audit under the Companies Act and an income tax audit under Section 44AB of the Income Tax Act serve different purposes and require separate reports. However, both can be conducted by the same Chartered Accountant. Where accounts are already audited under another law, Form 3CA is used instead of Form 3CB, confirming that the statutory audit has already been completed.

What are the consequences of filing an incorrect or incomplete Form 3CD?

An incorrect or incomplete Form 3CD can trigger scrutiny assessment under Section 143(3), addition of income or disallowance of expenses on the basis of incorrect disclosures, and penalty under Section 270A or Section 271(1)(c) for concealment or misreporting of income. The auditor may also face professional consequences for furnishing an incorrect report. It is therefore critical that all 44 clauses of Form 3CD are thoroughly and accurately prepared.

Accurate Tax Audit. Zero Surprises.

Expert income tax audit services — thorough Form 3CD preparation and on-time filing.