Tax audit applicability checker
Find out in a minute whether your business or profession needs a tax audit this year. The checker uses the limits in section 63 of the Income-tax Act, 2025, which replaced section 44AB of the 1961 Act from 1 April 2026, including the higher limits for mostly-digital businesses and the presumptive schemes.
A planning aid, not tax advice. Rules around presumptive opt-outs and lock-in periods can change the answer, so confirm with your Chartered Accountant before filing.
In short. A business needs a tax audit when turnover crosses ₹1 crore, or ₹10 crore if both cash receipts and cash payments stay within 5%. A profession needs one when gross receipts cross ₹50 lakh. Presumptive taxpayers who declare at least the prescribed profit rate generally do not need one.
The limits at a glance
| Situation | Audit needed when |
|---|---|
| Business, normal books | Turnover above ₹1 crore |
| Business, cash receipts and cash payments each at most 5% | Turnover above ₹10 crore |
| Business on the presumptive scheme | Profit declared below 6% (digital receipts) or 8% (other receipts) and income above the exemption limit |
| Profession, normal books | Gross receipts above ₹50 lakh |
| Profession on the presumptive scheme | Profit declared below 50% of receipts and income above the exemption limit |
What the auditor will ask for
- Books of account and bank statements for the full year, reconciled
- GST returns, so turnover in the books can be matched with turnover reported for GST
- TDS returns and challans, with any short or late deduction explained
- Fixed asset register with additions and sales, for depreciation
- Loans taken and repaid, with confirmations from lenders
- Details of payments to related parties and cash payments above the permitted limit
Frequently asked questions
Which law applies for the year starting 1 April 2026?
The Income-tax Act, 2025 applies from 1 April 2026. Tax audit moved from section 44AB of the 1961 Act to section 63 of the new Act, with the same broad limits. Years before 1 April 2026 still follow the 1961 Act.
Does turnover include GST?
Turnover for tax audit is generally taken net of GST when GST is collected and paid separately, following the ICAI guidance note. Your auditor will confirm the treatment in your books.
What counts as a cash transaction for the 5% test?
Receipts and payments other than through banking channels, such as an account payee cheque, bank draft or electronic transfer. Both receipts and payments must stay within 5% of their totals.
What happens if a required audit is not done?
A penalty has applied of 0.5% of turnover, capped at ₹1.5 lakh, unless there was a reasonable cause. The return may also be treated as defective.
Is a company also subject to tax audit?
Yes, if it crosses the same limits. A company's statutory audit under the Companies Act is separate, and CARO 2020 reporting may also apply. Check with our CARO 2020 applicability checker.