Tax Audit Under New Act: 44AB is Now Section 57
- Section 44AB renumbered as Section 57. Substance and thresholds unchanged.
- Business turnover threshold: Rs 1 crore. Rs 10 crore if digital receipts and payments exceed 95% of total.
- Profession turnover threshold: Rs 50 lakh.
- Forms unchanged: 3CA, 3CB, 3CD. Due date: 30 September of the relevant AY. Penalty Section 271B: 0.5% of turnover (capped at Rs 1.5 lakh).
If you run a business or practice a profession, tax audit is one of the most important compliance requirements under income tax law. Section 44AB is now Section 57 under the Income Tax Act 2025. The audit thresholds and requirements remain largely the same - only the section number has changed.
Section 44AB to Section 57: What Changed
Who Needs a Tax Audit Under Section 57
A tax audit is mandatory if:
- Business turnover exceeds Rs 1 crore in the financial year
- Professional gross receipts exceed Rs 50 lakh in the financial year
- Business turnover exceeds Rs 10 crore but at least 95% of transactions are digital (both receipts and payments) - this higher threshold applies only when cash dealings are minimal
- You opted for presumptive taxation (Section 58/59) in a previous year but want to opt out and declare lower income - audit becomes mandatory for the next 5 years
Audit Forms: 3CA, 3CB, and 3CD
The audit report forms remain the same:
- Form 3CA - used when accounts are already audited under another law (like the Companies Act)
- Form 3CB - used when accounts are not audited under any other law (sole proprietors, partnerships)
- Form 3CD - the detailed statement of particulars, filed along with either 3CA or 3CB
The audit must be conducted by a Chartered Accountant and filed electronically.
Due Date for Tax Audit
The due date for filing the tax audit report is September 30 of the assessment year. For example, for FY 2026-27, the tax audit report must be filed by September 30, 2027.
The income tax return due date for audit cases is October 31 - one month after the audit deadline.
Penalties for Non-Compliance
If you are required to get a tax audit but fail to do so:
- Penalty: 0.5% of total turnover or gross receipts, or Rs 1,50,000 - whichever is lower
- Late filing: If the audit report is filed after September 30, it is treated as non-compliance
- Disallowance of expenses: Certain deductions (like under Section 55, old 43B) may be questioned without a proper audit
Exemption for Presumptive Taxation
If you opt for presumptive taxation under Section 58 (old 44AD) or Section 59 (old 44ADA) and declare income at or above the prescribed rate (6%/8% for business, 50% for professionals), you do not need a tax audit regardless of your turnover - as long as your turnover is within the presumptive scheme limits.
Frequently Asked Questions
What is the new section number for tax audit (44AB)?
Section 44AB is now Section 57 under the Income Tax Act 2025. The turnover thresholds of Rs 1 crore for business and Rs 50 lakh for professionals remain the same.
Is tax audit required if my turnover is below Rs 1 crore?
No. If your business turnover is below Rs 1 crore (or Rs 10 crore with 95% digital transactions), you are not required to get a tax audit under Section 57. However, you must still maintain proper books of accounts.
What is the penalty for not getting a tax audit?
The penalty is 0.5% of total turnover or gross receipts, or Rs 1,50,000, whichever is lower. This penalty is levied under the new act's penalty provisions (old Section 271B, now Section 443).
Can I avoid tax audit by opting for presumptive taxation?
Yes. If you declare income at or above the prescribed rates under Section 58 (old 44AD) or Section 59 (old 44ADA), tax audit is not required. But if you opt out of presumptive taxation after choosing it, audit becomes mandatory for the next 5 years.
For the presumptive route that skips tax audit, see presumptive taxation now Section 58. For the payment-basis deductions that auditors check most carefully, see Section 43B now Section 55.
Disclaimer: This article provides general information about the Income Tax Act 2025 and is not tax advice. Consult a qualified Chartered Accountant for advice specific to your situation.
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