Applicability of Section 44AB

• Section 44AB mandates a tax audit for companies if their turnover exceeds the specified threshold.
  
• For corporates engaged in business, the audit applies if gross receipts exceed ₹1 crore.
  
• If cash transactions are limited to 5 percent of total receipts and payments, the limit is ₹10 crore.
  
• For companies engaged in a profession, the threshold is ₹50 lakh.
  
• Audit is applicable even if the company is loss-making or exempt under other laws.
  

Purpose of Tax Audit

• The audit ensures the correctness of income computation for tax purposes.
  
• It verifies compliance with tax provisions and reporting requirements.
  
• The report helps in detecting non-deductible expenses and disallowed claims.
  
• It provides an independent assessment of accounting and tax records.
  
• Tax audit helps in reducing tax evasion and enhancing transparency.
  

Forms and Reporting Requirements

• The tax audit report must be furnished in Form 3CA (for companies) along with Form 3CD.
  
• Form 3CD contains detailed schedules of income, deductions, TDS, GST, and related-party transactions.
  
• All prescribed clauses must be filled accurately based on books of accounts.
  
• Auditor’s opinion and verification are mandatory in the audit report.
  
• The report must be submitted electronically with the auditor’s digital signature.
  

Due Date and Penalty for Non-Compliance

• The audit report must be filed by September 30 of the relevant assessment year.
  
• Delay in filing attracts a penalty under section 271B.
  
• The penalty is 0.5 percent of turnover or gross receipts, subject to a maximum of ₹1.5 lakh.
  
• Reasonable cause for delay can be considered for penalty waiver.
  
• Timely filing is necessary for return acceptance and tax planning benefits.
  

Compliance and Documentation

• Maintain accurate books of account, vouchers, and invoices for verification.
  
• Ensure reconciliation of TDS, GST, and bank accounts with accounting records.
  
• Disclose all income sources, loans, advances, and related-party dealings.
  
• Auditor must report on compliance with sections like 40A, 43B, and TDS provisions.
  
• Proper audit facilitates smooth assessments and reduces litigation risks.