Tax Audit

A tax audit is the examination of a taxpayer's accounts by a Chartered Accountant under Section 44AB of the Income-tax Act, 1961, to verify the books and report the particulars the law prescribes in Form 3CD.

It does not assess tax itself; it gives the department an independent report of the financial particulars relevant to the return, helping ensure income is computed correctly.

The tax audit verifies the books and reports the Form 3CD particulars, including:

• Method of accounting and any change, and the effect of ICDS
• Depreciation, and amounts disallowable under Sections 40, 40A, 43B and others
• Payments attracting TDS and any default in deduction or deposit
• Loans, deposits, and specified cash transactions under Sections 269SS/269ST/269T
• Stock valuation, related-party payments, and other prescribed clauses

1. 01

   Confirm applicability

   Establish whether a tax audit is required and under which clause, and which form (3CA or 3CB) applies.

2. 02

   Verify the books

   Examine the accounts, reconcile with the financial statements, and gather the particulars for Form 3CD.

3. 03

   Prepare the report

   Complete Form 3CD and the audit report, discussing observations with you.

4. 04

   File before the due date

   Upload and e-verify the report so the return can be filed on time.

PBT completes your tax audit accurately and on time, and flags issues before they become notices.

• Correct determination of applicability under Section 44AB
• Careful reporting of every Form 3CD clause, with reconciliations
• Early flagging of disallowances and TDS defaults so they can be corrected
• Filing within the statutory due date to avoid penalty under Section 271B
• Scope, deliverables, and fees agreed in writing up front

• What is the penalty for not getting a tax audit done?

  Under Section 271B, 0.5% of turnover or gross receipts, up to ₹1,50,000 — unless there is reasonable cause.

• Can my statutory auditor also do the tax audit?

  Yes, the same CA can conduct both, subject to the ceiling on the number of tax audits a member may sign.

• Is a tax audit the same as filing my return?

  No. The tax audit report supports the return; the return is filed separately. The audit report must be filed before the return.

• How long does it take?

  Usually one to two weeks once the books are finalised, depending on the volume of transactions. We work to the audit and return due dates.