Most businesses are told that the tax audit limit under section 44AB is Rs 1 crore of turnover or gross receipts in a financial year, and many small traders and shopkeepers are watching their yearly sales figure with this number in mind. However, the limit is Rs 10 crore for those businesses whose cash receipts and cash payments are each within 5% of their total transactions.
Alongside this, there is a second trigger for businesses under the presumptive scheme. If a business that opted out of the presumptive scheme within the last five years has total income above the basic exemption limit, the audit becomes compulsory even when turnover is far below the main limit.
Limits for professionals
For individuals practising a profession, the audit limit is lower, and the gross receipts figure that applies to them is Rs 50 lakh in a financial year. Many consultants and independent practitioners are checking their yearly fee receipts against this number.
The specified professions covered by this limit include legal, medical, engineering, architectural, accountancy, technical consultancy and interior decoration work. A doctor running a clinic or an interior decorator taking projects from households will therefore be counted under the professional limit and not the business limit.
Alongside this, professionals under the presumptive scheme may use an enhanced limit of Rs 75 lakh to stay in that scheme in certain cases, but the audit limit for professionals stays at Rs 50 lakh. The Rs 75 lakh limit applies under the presumptive scheme for professionals where cash receipts are within 5% of total receipts.
Deadlines, forms and penalty
For AY 2026-27, the audit report was originally due on 30 September 2026 and the income tax return on 31 October 2026. The CBDT moved these to 21 October and 21 November 2026 through Circular 7/2026 dated 28 September 2026.
The audit report is filed in Form 3CD, together with Form 3CA where another law already requires the audit, or Form 3CB in other cases. Failure to file the report in time may attract a penalty under section 271B.
Under the Income-tax Act, 2025, tax audit for income earned from 1 April 2026 falls under section 63, and Form 26 replaces Forms 3CA, 3CB and 3CD.
