Income Tax Audit

An income tax audit is a review of financial records to verify that the taxpayer has accurately reported income, expenses, and taxes owed. under section 44ab of the income tax act, businesses and professionals crossing specified turnover or income limits must get their accounts audited by a chartered accountant. the audit ensures transparency, prevents tax evasion, and maintains compliance with the law.

maintain proper books of accounts
ensure all financial records, bills, and transactions are accurately recorded throughout the financial year.
appoint a chartered accountant (ca)

select a certified ca to conduct the audit as per section 44ab of the income tax act.
audit of accounts

the ca will verify your books, prepare the audit report in form 3ca/3cb and fill in details in form 3cd.
submit audit report

the ca uploads the audit report on the income tax portal using their login. the taxpayer must approve it later through their own login.
file income tax return (itr)

after the audit report is submitted, file your ITR before the due date (generally 30th september unless extended).

ensures financial transparency

verifies that income and expenses are accurately recorded, building trust with stakeholders and authorities.
prevents legal issues

helps avoid penalties, notices, or tax scrutiny by staying compliant with tax laws.
improves business credibility

audited financials boost your reputation with banks, investors, and government bodies.
helps in better financial planning

provides insights into your financial health and assists in making informed business decisions.

businesses with turnover over ₹1 crore or professionals with gross receipts over ₹50 lakhs (thresholds may vary) must get audited under section 44ab

only a chartered accountant (ca) registered with the icai is authorized to perform the audit.

penalty may be levied at 0.5% of turnover/gross receipts, subject to a maximum of ₹1.5 lakh.

who is required to get an income tax audit +