Statutory Audit Applicability in India

Two different audits people confuse

The word 'audit' hides two separate requirements that catch business owners out. A statutory audit under the Companies Act applies to companies because of their structure. A tax audit under Section 44AB of the Income Tax Act applies to any business or profession because of its turnover. You can be subject to one, both, or neither, and knowing which is essential, because the penalties for missing an audit are severe.

This guide separates the two clearly, so you know exactly what applies to your entity. Our audit & assurance service handles both, but the first step is understanding your obligation.

Statutory audit: driven by structure

The statutory (company) audit is unavoidable for certain entities regardless of turnover:

• Every company, private limited, public limited, and one-person company, must have its accounts audited by a Chartered Accountant every year, even with zero turnover.
• LLPs must be audited only if turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh.
• Proprietorships and partnerships have no statutory (structural) audit, but may still need a tax audit on turnover grounds.

Tax audit under Section 44AB: driven by turnover

The tax audit applies to any business or profession that crosses a turnover threshold:

• Business: turnover above ₹1 crore, raised to ₹10 crore if at least 95% of receipts and payments are digital (cash below 5%).
• Profession: gross receipts above ₹75 lakh.
• Presumptive taxpayers who declare lower profits than the presumptive rate (and exceed the basic exemption) are pushed into a tax audit, a common trap for those leaving 44ADA.

The tax audit report is filed in Form 3CA/3CB and 3CD, and it must be completed before you file the business's income tax return.

Due dates and penalties

For entities subject to a tax audit, the audit report is generally due by 30 September, with the income tax return following by 31 October. Company statutory audits align with the ROC calendar, the audited accounts feed AOC-4 and the AGM.

Miss a required tax audit and Section 271B imposes a penalty of 0.5% of turnover, up to ₹1,50,000. For a company that skips its statutory audit, the consequences extend to the directors and the company's standing. These are not charges to risk, an audit is far cheaper than the penalty for skipping it.

Getting your audit done right

The practical questions to settle each year: Is my entity a company (statutory audit, always)? Does my turnover cross the 44AB threshold (tax audit)? Am I a presumptive taxpayer declaring lower profits (tax audit)? Is my LLP over the ₹40 lakh / ₹25 lakh line? Answering these tells you your obligation.

Beyond compliance, a well-run audit is genuinely useful, it surfaces control weaknesses, catches errors, and produces financials that banks and investors trust. Our audit & assurance service handles statutory, tax, and internal audits with UDIN-backed reports, and we explain the findings rather than just filing them. book a free consultation to confirm what applies to your business and get it done on time.

An audit-applicability checklist

Settle your audit obligation each year by answering these in order:

• Are you a company? If yes, a statutory audit is mandatory regardless of turnover, feeding your filings on the MCA portal.
• Is your business turnover above ₹1 crore (₹10 crore if 95%+ digital)? If yes, a 44AB tax audit applies.
• Are your professional receipts above ₹75 lakh? If yes, a tax audit applies.
• Are you a presumptive taxpayer declaring lower profits? That can force a tax audit.
• Is your LLP over ₹40 lakh turnover or ₹25 lakh contribution? If yes, audit required.

The tax-audit report is filed on the income tax e-filing portal before the return. Because the penalty for skipping a required audit reaches ₹1,50,000, the cheapest path is always to confirm applicability early and schedule the audit well before the September deadline rather than discovering the obligation at the last minute.