{"id":7738,"date":"2025-07-14T10:46:38","date_gmt":"2025-07-14T10:46:38","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&p=7738"},"modified":"2025-07-14T10:46:43","modified_gmt":"2025-07-14T10:46:43","slug":"section-44ab","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/section-44ab\/","title":{"rendered":"Section\u202f44AB"},"content":{"rendered":"

Section 44AB<\/a> of the Income Tax Act<\/a> lays down detailed rules for a tax<\/a> audit<\/strong>. It requires certain taxpayers (businesses and professionals) to have their books of accounts audited by a Chartered Accountant<\/strong> and submit an audit report along with their income tax<\/a> return.<\/p>\n\n\n\n

Objectives of Tax Audit under 44AB<\/h2>\n\n\n\n
    \n
  1. Ensure accurate bookkeeping<\/strong> – verify correct and legitimate maintenance of accounts .<\/li>\n\n\n\n
  2. Expose errors or frauds<\/strong> – detect discrepancies, under-reporting, or manipulations in records .<\/li>\n\n\n\n
  3. Verify compliance<\/strong> – ensure tax laws, deductions, depreciation, and TDS<\/a>\/TCS are correctly applied .<\/li>\n\n\n\n
  4. Support accurate tax computation and transparency<\/strong> – helps assess true income and tax obligations .<\/li>\n<\/ol>\n\n\n\n

    Applicability Criteria<\/h2>\n\n\n\n

    Business:<\/h3>\n\n\n\n
      \n
    • Turnover exceeds ₹1 crore<\/strong> in a financial year;<\/li>\n\n\n\n
    • Or up to ₹10 crore<\/strong> if cash receipts\/payments are ≤ 5% of total transactions.<\/li>\n<\/ul>\n\n\n\n

      Professionals:<\/h3>\n\n\n\n
        \n
      • Gross receipts over ₹50 lakh<\/strong> in a year.<\/li>\n<\/ul>\n\n\n\n

        Exception for presumptive schemes:<\/h3>\n\n\n\n
          \n
        • Applies if using presumptive taxation under Sections 44AD, 44ADA, 44AE, etc.<\/strong>, but declaring income below prescribed rates<\/strong> and<\/em> total income exceeds basic exemption<\/strong>.<\/li>\n<\/ul>\n\n\n\n

          Other scenarios:<\/h3>\n\n\n\n
            \n
          • Loss declared with turnover > ₹1 crore<\/strong>, income above exemption limit.<\/li>\n<\/ul>\n\n\n\n

            Due Dates & Reporting<\/h2>\n\n\n\n
              \n
            • Audit report & ITR<\/strong> for non-TP cases: by Sept 30<\/strong> following financial year.<\/li>\n\n\n\n
            • For transfer-pricing or international transactions: by Oct 31<\/strong>.<\/li>\n\n\n\n
            • FY 2024–25 deadline extended to Oct 7, 2024<\/strong>, per CBDT.<\/li>\n<\/ul>\n\n\n\n

              Audit Report Forms<\/h2>\n\n\n\n
                \n
              • Form 3CA + 3CD<\/strong>: if already audited under another law.<\/li>\n\n\n\n
              • Form 3CB + 3CD<\/strong>: if not audited under another law.<\/li>\n<\/ul>\n\n\n\n

                Penalties for Non-Compliance<\/h2>\n\n\n\n

                Under Section 271B<\/strong>, a penalty applies if audit isn’t done or report isn’t filed on time:<\/p>\n\n\n\n

                  \n
                • 0.5% of turnover\/gross receipts<\/strong>, or ₹1.5 lakh<\/strong>, whichever is lower<\/strong>.<\/li>\n\n\n\n
                • Reasonable cause<\/strong> (e.g., natural calamity, auditor resignation) can lead to waiver .<\/li>\n<\/ul>\n\n\n\n

                  Summary Table<\/h2>\n\n\n\n
                  Feature<\/th>Details<\/th><\/tr><\/thead>
                  Objective<\/strong><\/td>Validate accounts, reveal errors\/frauds, ensure legal compliance<\/td><\/tr>
                  Who needs audit?<\/strong><\/td>Businesses > ₹1 cr (≤10 cr with low cash); Professionals > ₹50 L<\/td><\/tr>
                  Exceptions<\/strong><\/td>Presumptive scheme users declaring low profits + income > exemption<\/td><\/tr>
                  Forms<\/strong><\/td>3CA\/3CB + 3CD via CA<\/td><\/tr>
                  Due date<\/strong><\/td>Sep 30 (non-TP); Oct 31 (TP); FY 24–25 extended to Oct 7, 2024<\/td><\/tr>
                  Penalty (271B)<\/strong><\/td>0.5% of turnover or ₹1.5L (lower) unless valid cause<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

                  Final Takeaway<\/h3>\n\n\n\n

                  Section 44AB ensures that taxpayers above key thresholds maintain transparent, accurate accounts audited by a CA. It boosts accountability, enhances compliance, and helps the tax department rely on reliable financial records. Failing to comply leads to penalties—though waivers are possible with genuine reasons.<\/p>\n","protected":false},"excerpt":{"rendered":"

                  Section 44AB of the Income Tax Act lays down detailed rules for a tax audit. It requires certain taxpayers (businesses and professionals) to have their books of accounts audited by a Chartered Accountant and submit an audit report along with their income tax return. Objectives of Tax Audit under 44AB Applicability Criteria Business: Professionals: Exception for […]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7738","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7738","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7738\/revisions"}],"predecessor-version":[{"id":7739,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7738\/revisions\/7739"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7738"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}