Do I need a tax audit?
For CAs taking on a new client or planning the season. Answer six questions and see whether section 63 of the Income-tax Act 2025 requires a tax audit, under which provision, and the clause 9 row of Form 26.
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Answer the questions to see if a tax audit applies
You will see the answer under section 63 of the Income-tax Act 2025, the reasons, the limits used and the clause 9 row of Form 26.
Charter prepares the Form 26 workpapers from your Tally data.
Import the trial balance and day book. Charter fills every clause it can compute, with the source vouchers behind each figure, for you to review and sign.
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How this is worked out
- Business: turnover above ₹1 crore needs an audit (section 63(1), Table 1(a)). Between ₹1 crore and ₹10 crore, the ₹10 crore limit applies only when cash receipts and cash payments are each within 5% of the totals (Table 1(b)).
- Profession: gross receipts above ₹50 lakh need an audit (Table 1(c)). With both business and profession, each part is tested against its own limit.
- Presumptive: profit declared at the deemed rate means no audit (section 63(2)). Profit declared below it, or leaving the scheme within the lock-in (section 58(8)), means an audit.
- The cash share is compared exactly, to two decimals of a percent. A limit is breached only when the figure exceeds it, as the Act words it.
- Every limit comes from a table that names its section, its source and the date it was last read, shown under the answer. Audit under another law (section 63(4)) is not tested here.
Questions CAs ask
What are the tax audit limits under the Income-tax Act 2025?
Section 63(1): a business needs an audit when total sales, turnover or gross receipts exceed ₹1 crore, or ₹10 crore where cash receipts and cash payments are each within 5% of the totals. A profession needs one when gross receipts exceed ₹50 lakh. These are the same figures as section 44AB of the 1961 Act.
How do I work out the 5% cash share?
From the day book for the year: cash receipts divided by total receipts, and cash payments divided by total payments. Both must be within 5% for the ₹10 crore limit to apply. Under section 63(5)(b), a cheque or draft that is not account payee counts as cash.
Does a presumptive taxation case need a tax audit?
Not when profit is declared at the deemed rate under section 58(2) or 61(2): section 63(2) takes it out of audit. Declaring profit below the deemed rate brings it into audit. Opting out within the lock-in period brings in section 58(8), which needs an audit only where total income exceeds the maximum amount not chargeable to tax.
What goes in clause 9 of Form 26?
Clause 9 asks for the relevant provision under which the audit is conducted, and you select one: business turnover, profession receipts, presumptive profit claimed lower than the deemed profit, or section 58(8). It replaces clause 8 of the old Form 3CD. The checker shows the clause 9 row with the applicable provision ticked.
Is anything I enter sent or stored?
No. The answer is worked out in your browser from the figures you type. Nothing is sent to Charter AI or stored.