Tax audit threshold

Tax audit (Form 3CD report) is mandatory for business turnover above ₹1 Cr (₹10 Cr if 95%+ digital), professional gross receipts above ₹50 L, and for any taxpayer claiming below-presumptive profits under §44AD or §44ADA.

Key points

• Several categories trigger tax audit: (a) business with turnover, gross receipts, or sales above ₹1 Cr;
• (b) business with 95%+ cash receipts AND 95%+ cash payments — the threshold here is relaxed to ₹10 Cr (Finance Act 2020 onwards, clarified by FA 2021);
• (c) profession with gross receipts above ₹50 L;
• (d) a §44AD-eligible assessee who declares profit below 6% or 8% AND whose total income exceeds the basic exemption limit;
• (e) a §44ADA-eligible assessee declaring profit below 50%;
• (f) anyone under §44AE, §44BB, or §44BBB who claims lower profits than the prescribed presumptive rate.
• The audit report is filed on Form 3CA (if audited under any other law, e.g. Companies Act) or Form 3CB (if no other audit), in either case accompanied by Form 3CD (statement of particulars).
• The due date is 30 September, extended to 31 October from AY 2025-26 onwards by Finance Act 2025.
• The penalty under §271B is 0.5% of turnover or ₹1,50,000 — whichever is LOWER — for non-filing.

Reference: §44AB, ITA 1961 (renumbered §63 under ITA 2025)