Tax Audit (u/s 44AB of Income Tax Act, 1961)
Who Needs This?
Tax Audit is mandatory under Section 44AB for:
Businesses with turnover > ₹1 crore (limit extended to ₹10 crore if cash transactions ≤ 5%).
Professionals with gross receipts > ₹50 lakh.
Persons opting for Presumptive Taxation (44AD/44ADA/44AE) but declaring income lower than prescribed.
Why It Matters
A Tax Audit ensures:
Proper reporting of incomes, expenses, and deductions.
Verification of books of accounts by a Chartered Accountant.
Smooth filing of Income Tax Returns (ITR).
Avoidance of penalties for incorrect reporting.
Process of Tax Audit
Preparation of Books of Accounts (sales, purchases, expenses, ledgers).
Verification by a Chartered Accountant.
Filing of Tax Audit Report in Form 3CA/3CB along with Form 3CD (audit checklist).
Linking of report to the assessee’s PAN and ITR filing.
Due Date
30th September of the Assessment Year (extended to 31st October in certain cases).
30th November if Transfer Pricing Audit is also applicable.
Penalty for Non-Compliance
Penalty of 0.5% of turnover/gross receipts, up to a maximum of ₹1,50,000.
How Law to Corporate (LTC) Helps
Assessing applicability of tax audit to your business.
Preparation & review of accounts for audit.
Coordinating with Chartered Accountants for filing Form 3CD.
Ensuring timely completion to avoid penalties.