Tax audit: who needs it
For FY 2025-26, tax audit is governed by section 44AB of the Income-tax Act, 1961. The tax audit report is due by 30 September 2026 and the return by 31 October 2026.
| Taxpayer | Tax audit required when |
|---|---|
| Business | Turnover exceeds ₹1 crore |
| Business with cash receipts and cash payments each within 5% of the total | Turnover exceeds ₹10 crore |
| Profession | Gross receipts exceed ₹50 lakh, or ₹75 lakh where cash receipts are within 5% of the total |
| Presumptive taxation | Profit declared below the presumptive rate and total income above the basic exemption limit, in the cases specified in the Act |
Failure to get accounts audited can attract a penalty of 0.5% of turnover, up to ₹1.5 lakh. From tax year 2026-27, the corresponding provisions sit in the Income-tax Act, 2025 with a new consolidated audit form.
Statutory audit of companies
Every company, whatever its size, must have its financial statements audited under the Companies Act, 2013. The work covers:
- Audit under the Standards on Auditing, with reporting under section 143, including CARO 2020 where applicable.
- Review of internal financial controls where required, related party transactions and MSME dues.
- Coordination with the company’s AGM and ROC filings (ADT-1, AOC-4).
Auditor appointment and rotation follow the Companies Act and ICAI requirements, including communication with the previous auditor.
Other audits
- LLP audit: mandatory where turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh.
- Trust and NGO audit: audit reports for trusts and institutions registered under sections 12A/12AB and 10(23C).
- Internal audit and process review: purchase-to-pay, order-to-cash, inventory and payroll controls.
- Stock and receivables audits for banks, and certifications required by lenders and authorities.
How to prepare for an audit
- Close books with bank, GST and TDS reconciliations complete.
- Prepare schedules: fixed assets with additions, loans and advances, debtors and creditors ageing, and MSME supplier classification.
- Keep GST returns, TDS returns, loan confirmations and statutory registers ready.
- List related parties and transactions with them.
- Resolve cash transactions above permitted limits and payments to MSMEs beyond 45 days, which affect tax deductions.
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