Share :
Income Tax Audit Applicability at Glance

Join TaxGyata WhatsApp Group or Telegram Group for Latest Updates on Income Tax, GST, Company Law and Finance.


Section 44B of Income Tax Act, 1961

Section 44AB provides provisions relating to the class of Income taxpayers who are required to get their accounts audited from a chartered accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant.

The chartered accountant conducting the tax audit is required to give his findings, observation, etc., in the form of an audit report. The report of tax audit is to be given by the chartered accountant in Form Nos. 3CA/3CB and ​3CD.


Latest Updates

  1. Due date to furnish the audit report is extended to 15th January 2022
  2. Due date to furnish the audit report for transfer pricing cases is extended to 31st January 2022
  3. CBDT has enabled tax audit utility for filing the audit report (TAR) for assessment year 2021-22. 

Tax Audit Applicability for Individual/HUF/firm engaged in Business

 

Conditions

Tax Audit Applicability

Relevant Provision

Previous Year Turnover

Net Profit (%)

Cash Payment and Cash Receipts

Turnover > 5 Crore

-

-

Yes

Section 44AB(a)

Turnover between 2 to 5 crore

-

If more than 5%

Yes

Section 44AB(a)

Turnover between 1 to 2 Crore

Net profit > 8% or 6% of turnover

(opts for presumptive taxation scheme under section 44AD​ )

-

No

-

Turnover between 1 to 2 Crore

Net profit < 8% or 6% of turnover

-

Yes

Section 44AB(a)

Turnover up to 1 Crore

Net profit > 8% or 6% of turnover

-

No

-

Turnover up to 1 Crore

Net profit < 8% or 6% of turnover

(opts for presumptive taxation scheme under section 44AD​ )

-

Yes

Section 44AD(e)

 

Tax Audit Applicability for Individual/HUF/firm engaged in Profession

 

Previous Year Turnover

Net Profit (%)

Tax Audit Applicability

Relevant Provision

Turnover > 50 lakh

-

Yes

Section 44AB(b)

Turnover > 50 lakh

Net Profit > 50 % of turnover

No

-

Turnover < 50 lakh

Net Profit < 50 % of turnover

Yes

Section 44AB(b)

 

Tax Audit Due Date

 

Particulars

Due date

Extended Due date

Tax Audit (A.Y 2021-22)

30th September 2021

15th January 2022

 

If a person is required by or under any other law to get his accounts audited, then is it compulsory for him to once again get his accounts audited to comply with the requirement of section 44AB?​​​​​​​​

Persons like company or cooperative society are required to get their accounts audited under their respective laws. Section 44AB provides that, if a person is required by or under any other law to get his accounts audited, then he need not again get his accounts audited to comply with the requirement of section 44AB.

In such a case, it shall be sufficient if such person gets the accounts of such business or profession audited under such law and obtains the report of the audit as required under such other law and also a report by the chartered accountant in the form prescribed under section 44AB, 

Penalty provisions

If any taxpayer who is required to get the tax audit done but fails to do so, the least of the following may be levied as a penalty:

  • 0.5% of the total sales,
  • turnover or gross receipts Rs 1,50,000

However, if there is a reasonable cause of such failure, no penalty shall be levied under section 271B

Frequently asked questions (FAQs)

The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44AB​ is called tax audit. The objective of the tax audit is to ascertain the compliance of various provisions of the Income-tax Law and the fulfillment of other requirements of the Income-tax Law.

The report of the tax audit conducted by the chartered accountant is to be ​furnished in the prescribed form. The form prescribed for audit report in respect of audit conducted under section 44AB​ is Form No. 3CB and the prescribed particulars are to be reported in Form No. 3CD.

In the case of persons who are required to get their accounts audited by or under any other law, the form prescribed for the audit report is Form No. 3CA​ and the prescribed particulars are to be reported in Form No. 3CD.​


Share :
CA Anand Singh

CA Anand Singh

I am a practising Chartered Accountant with 6 years of experience in Direct and Indirect Taxation, FEMA, Corporate Law and Audit etc.