Tax Audit Services in India – A Complete Guide

1 · Introduction to Tax Audit Services

Tax Audit is a mandatory compliance requirement under Section 44AB of the Income Tax Act, 1961, aimed at verifying the accuracy of income declared and deductions claimed by businesses and professionals. Conducted by a Chartered Accountant, a tax audit ensures transparency, prevents tax evasion, and maintains the integrity of the financial reporting system. Our Tax Audit Services are designed to help you stay compliant while also identifying financial and operational efficiencies.

2 · Why Tax Audit Matters

• Regulatory Compliance – Avoid penalties and legal consequences by fulfilling mandatory audit requirements.

• Authenticity of Financial Records – Establishes credibility with the Income Tax Department.

• Smooth Assessments – Accurate audit reports reduce scrutiny and simplify assessment procedures.

• Tax Efficiency – Helps identify unnecessary tax liabilities and missed benefits.

• Business Reputation – Enhances trust among stakeholders, lenders, and investors.

3 · Who is Liable for Tax Audit?

As per Section 44AB, the following taxpayers are required to undergo a tax audit:

• Businesses: If total sales/turnover/gross receipts exceed ₹1 crore (₹10 crore if digital transactions are >95%).

• Professionals: If gross receipts exceed ₹50 lakh in a financial year.

• Presumptive Taxation Opt-Out: Taxpayers opting out of Section 44AD/44ADA presumptive scheme before 5 years.

• Specified Cases: If profit declared is below prescribed limits under presumptive schemes.

4 · Benefits of Professional Tax Audit Services

Benefit	Description
Expert Guidance	Compliance with Section 44AB, 44AD, 44ADA, and 44AE requirements
Error-Free Filing	Accurate computation and audit report preparation (Form 3CA/3CB & 3CD)
Reduces Tax Risk	Detects discrepancies early and prevents litigation
Timely Filing	Avoid penalties under Section 271B
Financial Insights	Understand your profit margins, cost structures, and tax-saving gaps

5 · Documentation Required for Tax Audit

For Businesses:

• PAN, Aadhaar, last year’s ITR and audit reports

• Books of accounts – Cash Book, Ledger, Purchase & Sales Register

• GST returns – GSTR-1, GSTR-3B, and reconciliation

• TDS returns – Form 26Q/24Q/27Q

• Bank statements, loan agreements, and fixed asset register

• Details of stock, creditors, debtors

For Professionals:

• Receipts and invoices for services

• Expense vouchers

• TDS certificates and Form 26AS

• Income and expense summary

• Investment proofs and fixed asset details

6 · Tax Audit Filing Procedure

1. Eligibility Check – Determine if audit under Section 44AB is applicable

2. Engagement Letter – Appoint a Chartered Accountant for audit

3. Document Collection – Provide complete set of books and financial records

4. Audit Execution – Verification of income, expenses, deductions, and compliance

5. Audit Report Filing – CA files Form 3CA/3CB and 3CD with digital signature

6. ITR Filing – File Income Tax Return after audit report submission

7 · Due Date & Penalties

• Due Date for FY 2024-25: 30th September 2025

• Penalty for Non-Compliance (Sec 271B): 0.5% of turnover or ₹1,50,000, whichever is lower

8 · Common Mistakes to Avoid

• Ignoring audit applicability for high cash turnover

• Delay in appointing an auditor

• Incomplete or mismatched GST and TDS data

• Non-disclosure of loans, related-party transactions

• Incorrect reporting in Form 3CD clauses

9 · Frequently Asked Questions (FAQs)

Q1: Can a single CA handle multiple tax audits?
Yes, but within the limit prescribed by ICAI – currently 60 audits per CA (excluding certain types).

Q2: What is the difference between statutory audit and tax audit?
Statutory audit is mandated under the Companies Act, while tax audit is as per the Income Tax Act.

Q3: Can I file ITR without completing tax audit?
If tax audit is applicable and not completed, your ITR will be considered defective.

Q4: Can professionals under Section 44ADA be audited?
Only if they opt out or declare income below 50% of receipts.

Q5: Can LLPs and partnerships be subject to tax audit?
Yes, if they meet the turnover/gross receipt threshold as per Section 44AB.

 

Disclaimer: This content is for educational purposes only. Please consult a qualified professional for case-specific advice.