Tax Audit Under Section 44AB: Applicability and Deadlines

Tax audit under Section 44AB is mandatory once a business's turnover crosses ₹1 crore — but that threshold jumps to ₹10 crore if over 95% of both receipts and payments happen through banking channels rather than cash.

Who Needs a Tax Audit

• Businesses with turnover exceeding ₹1 crore (₹10 crore if cash transactions are under 5%)
• Professionals with gross receipts exceeding ₹50 lakh (₹75 lakh under the same digital-transaction condition)
• Anyone opting out of presumptive taxation after previously opting in, within the lock-in period
• Taxpayers under presumptive taxation whose actual profit is lower than the presumptive rate and total income exceeds the basic exemption limit

Deadline

The tax audit report (Form 3CA/3CB and 3CD) must be filed by 30 September of the assessment year for most taxpayers, with the ITR itself due by 31 October where a tax audit applies. Missing the audit deadline attracts a penalty under Section 271B — the lower of 0.5% of turnover or ₹1.5 lakh.

A Practical Note

Businesses hovering near the ₹1 crore mark should track their cash-vs-digital transaction ratio through the year, not just at closing — crossing into tax-audit territory unexpectedly, with no CA engaged and no books finalised in time, is a far more common problem than the audit itself.