In short: Every company needs a statutory audit every year, regardless of size. Tax audit under Section 44AB applies to businesses above ₹1 crore turnover — relaxed to ₹10 crore when at least 95% of receipts and payments are digital — and to professionals above ₹50 lakh (with presumptive-scheme nuances). LLPs need statutory audit above ₹40 lakh turnover or ₹25 lakh contribution. Getting this wrong in either direction costs money.
Statutory audit: the always-on obligation
If you run a private or public limited company, the Companies Act requires an audit of your financial statements every financial year — there is no turnover exemption, even for a zero-revenue startup in year one. An auditor must be appointed within 30 days of incorporation, and audited financials feed your AGM and ROC filings. LLPs are different: audit applies only above ₹40 lakh turnover or ₹25 lakh partner contribution.
Tax audit: the threshold maze
Section 44AB of the Income-tax Act requires a tax audit (Form 3CA/3CB with the detailed Form 3CD) when:
- Business turnover exceeds ₹1 crore — but the limit rises to ₹10 crore if cash receipts and cash payments are each 5% or less of totals. For digital-first businesses, this relaxation is the rule, not the exception.
- Professional gross receipts exceed ₹50 lakh (doctors, architects, consultants, CAs and similar).
- Presumptive-scheme exits: if you declare profits below the deemed 6%/8% (44AD) or 50% (44ADA) rates and your income exceeds the basic exemption, audit can trigger even at low turnover — the trap that catches F&O traders and freelancers most often.
The tax-audit report is generally due by 30 September, with the related return by 31 October.
Where businesses get it wrong
Assuming “no tax audit” means “no statutory audit” (companies need the latter regardless); counting turnover without GST consistently; F&O traders not realising their losses are business income with audit implications; and discovering in September that books for the whole year need reconstruction. An audit is painless when books are clean monthly — chaotic when they’re an annual archaeology project.
What a good audit gives you beyond compliance
Banks lend faster against audited statements; investors require them in diligence; and a thoughtful auditor’s management letter is a free internal-controls review. Our audit practice covers statutory, tax, internal and bank audits with senior-partner involvement — and our accounting team keeps books audit-ready year-round so the season is a formality, not a fire drill.
FAQs
My company made losses. Is statutory audit still required? Yes — profit or loss is irrelevant to the company-audit requirement.
I trade F&O with ₹60 lakh turnover. Do I need a tax audit? Possibly — it depends on computed turnover, declared profit relative to presumptive rates and your total income. This is one of the most fact-specific calls in tax; have it assessed properly.
Can the same CA do my statutory and tax audit? Usually yes, subject to independence and rotation rules — most clients prefer it for efficiency.
What documents should be ready before audit? Reconciled books, bank statements, GST and TDS returns, fixed-asset register, inventory records, loan statements and prior-year financials. We issue a checklist at engagement.
This article is for general information only and is not professional advice. Thresholds carry exceptions — confirm your position before deciding you’re exempt.