Tax Audit under Section 44AB: Limits, Due Dates & Penalty (AY 2026-27)
Last verified: June 2026, against the Income Tax Act provisions cited below. Figures apply to FY 2025-26 (AY 2026-27). This is general information, not personal tax advice.
Once your business turnover or professional receipts cross certain limits, the law requires your accounts to be audited by a Chartered Accountant under Section 44AB — a “tax audit”. Get the thresholds wrong and you risk a penalty of up to ₹1.5 lakh. Here is who needs a tax audit for AY 2026-27 and by when.
Who must get a tax audit
| Taxpayer | Audit required if… |
|---|---|
| Business | Turnover exceeds ₹1 crore |
| Business (mostly digital) | Turnover up to ₹10 crore is exempt if at least 95% of receipts and payments are non-cash |
| Profession | Gross receipts exceed ₹50 lakh |
| Presumptive scheme | You declare income lower than the deemed profit under 44AD/44ADA and your total income exceeds the basic exemption limit |
The ₹10 crore digital threshold is a big relief for businesses that transact almost entirely through banking channels. For thresholds and how presumptive taxation interacts with audit, see presumptive taxation under 44AD/44ADA/44AE.
What the audit involves
A Chartered Accountant examines your books and files an audit report — Form 3CA/3CB along with the detailed statement of particulars in Form 3CD — on the income-tax portal. You then file your ITR referencing this report.
Due dates for AY 2026-27
- Tax audit report: 30 September 2026.
- ITR for audit cases: 31 October 2026.
(For comparison, non-audit ITR-1/ITR-2 filers have a 31 July 2026 due date.)
Penalty for not getting audited — Section 271B
Failing to get the audit done or file the report on time can attract a penalty of 0.5% of turnover/gross receipts, capped at ₹1,50,000. The penalty can be waived if you show reasonable cause.
AY 2026-27 dates were extended
On 28 September 2026 the CBDT extended the due date for tax audit reports for AY 2026-27 to 21 October 2026 and the return due date for audit cases to 21 November 2026. From tax year 2026-27, the audit report forms 3CA, 3CB and 3CD are merged into a single Form 26 under the Income-tax Rules, 2026.
Worked examples
- A trader with ₹6 crore turnover, 98% received digitally: no audit, because the ₹10 crore limit applies when cash receipts and payments are each within 5%.
- A consultant with ₹62 lakh receipts under the presumptive scheme declaring 50% profit: no audit (limit ₹75 lakh with ≤5% cash).
- The same consultant declaring 35% profit with income above the basic exemption: audit required, because profit is below the presumptive rate.
Cost of missing it
The penalty is 0.5% of turnover or receipts, capped at ₹1.5 lakh. Missing the audit also delays your return, which then attracts late fees and interest.
What changes under the Income-tax Act, 2025
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. Returns for FY 2025-26 (AY 2026-27) are still filed under the old Act, old section numbers and old forms. From tax year 2026-27 onwards, section numbers and many form numbers change — for example, Form 16 becomes Form 130, Forms 15G/15H merge into Form 121, Form 26QB becomes part of Form 141 and Form 10E becomes Form 39. The underlying rules discussed here were largely carried over; only the references change.
FAQs
What is the audit due date for AY 2026-27?
21 October 2026 for the audit report and 21 November 2026 for the return, after the CBDT extension.
Is the business audit limit ₹1 crore or ₹10 crore?
₹1 crore by default. It rises to ₹10 crore only if at least 95% of both receipts and payments are non-cash.
What is the audit limit for professionals?
Gross receipts above ₹50 lakh in the year.
I am under presumptive taxation — do I need an audit?
Only if you declare income below the deemed rate and your total income exceeds the basic exemption limit.
What is the penalty for missing the tax audit?
Up to 0.5% of turnover, subject to a maximum of ₹1,50,000, under Section 271B.