Tax audit under Section 44AB is not a tax demand and it is not a scrutiny notice — it is a compliance step that a large share of business owners must complete before they file their return, and many realise they are inside it only when the deadline is days away. For the year ended 31 March 2026 (assessment year 2026-27), the audited accounts and the audit report have to be ready and filed by 30 September 2026, one month before the return itself is due. If your turnover or professional receipts crossed the thresholds below, an independent chartered accountant must examine your books and certify a prescribed set of particulars — and leaving that to the last week is how errors and penalties creep in.
What a tax audit under Section 44AB actually checks
A tax audit is an examination of your books of account by a chartered accountant, carried out specifically to satisfy the Income-tax Act. The auditor is not re-computing your tax for the department; they verify that your accounts are properly maintained and then report a detailed statement of particulars — turnover, method of accounting, deductions claimed, loans, payments that attract disallowance, TDS compliance and much more. The purpose is to give the tax department a reliable, standardised picture of the business so the return can be trusted. Because the auditor has to review a full year of records, the work cannot honestly be compressed into a single afternoon — which is why the 30 September date matters long before it arrives.
The turnover and receipts thresholds that trigger it
Whether you need a tax audit at all turns on how much you sold or earned during the year. Section 44AB sets three separate lines, and you only need to cross the one that applies to you.
| Who you are | Tax audit is required when… |
|---|---|
| Business (default) | Total sales, turnover or gross receipts exceed ₹1 crore in the year |
| Business (almost entirely non-cash) | The limit rises to ₹10 crore where cash receipts and cash payments each stay within 5% of the total |
| Profession | Gross receipts in the profession exceed ₹50 lakh in the year |
These figures come straight from Section 44AB. The business and profession tests are read independently — a consultant who also runs a small trading business looks at the ₹50 lakh professional line and the ₹1 crore business line separately, not at a combined total.
The 5% cash test that lifts the business limit to ₹10 crore
The higher ₹10 crore threshold is the one owners most often get wrong. It is not enough for your sales to be received digitally. The Act raises the limit from ₹1 crore to ₹10 crore only when both sides of the ledger are almost entirely non-cash: cash receipts during the year must not exceed 5% of total receipts, and cash payments must not exceed 5% of total payments. Miss the test on either side — a run of cash vendor payments, say — and you fall back to the ₹1 crore line, even if every rupee of sales came through a bank.
When presumptive taxation pulls you into an audit
There is a second route into Section 44AB that has nothing to do with the ₹1 crore or ₹10 crore figures. A small business or professional who has been declaring income under the presumptive schemes — Section 44AD for eligible businesses or 44ADA for professionals — can be pulled into a compulsory audit the moment they declare profit lower than the deemed rate those sections assume, provided their total income for the year is above the basic exemption limit.
If you have used presumptive taxation and your real margin this year is below the rate the scheme deems, you may be required to maintain regular books and get them audited — the opposite of the simplicity the scheme promised.
This is why stepping out of presumptive taxation is never just a form choice; it can carry an audit obligation with it. If that is your position for FY 2025-26, confirm it before you file, not after.
The forms, and why the deadline is 30 September 2026
The audit report is furnished in a prescribed form. Where your accounts are already audited under another law — a company audited under the Companies Act, for instance — the report goes in Form 3CA; in every other case it goes in Form 3CB. Both are accompanied by Form 3CD, the long statement of particulars that carries the substance of the audit.
On timing, Section 44AB fixes the deadline as the “specified date”, which it defines as the date one month prior to the due date for furnishing the return of income under sub-section (1) of Section 139. For taxpayers subject to audit, that return is due 31 October 2026 — so the specified date for having the accounts audited and the report filed works out to 30 September 2026. The report is filed first; the return follows.
What missing the deadline costs
Failing to get the accounts audited, or to furnish the report by the specified date, attracts a penalty under Section 271B. The penalty is one-half of one per cent (0.5%) of total sales, turnover or gross receipts for the year, subject to a monetary ceiling — so for a larger business the figure is not trivial. The law does allow the penalty to be waived where there was reasonable cause for the delay, but leaving it to the last week is not a reasonable cause. The cleaner path is to have the books closed and the auditor engaged well ahead of 30 September.
Getting audit-ready without the September scramble
The businesses that find tax audit painless are the ones whose books were reconciled month by month, not the ones who hand over a year of records in September. If you are unsure whether you have crossed the Section 44AB line this year, or you want your accounts closed and audit-ready before the deadline, Indefine’s tax audit support and income tax filing teams handle both — and if your entity is also audited under company law, the same team runs your statutory audit in step. Start early enough that 30 September is a filing date, not a deadline you are racing.