A tax audit under section 44AB of the Income-tax Act, 1961 is a report to the Assessing Officer, in a prescribed form, of specified particulars of a business or profession. It is not an opinion that the financial statements give a true and fair view — that is the statutory auditor’s work. It is a structured disclosure of method of accounting, quantitative details, loans, payments liable to tax deduction, GST reconciliation and other clauses of Form 3CD.
Who it applies to
The section captures businesses and professions that cross the monetary limits in force for the relevant previous year, and certain assessees who claim presumptive taxation but wish to declare a lower income. Rice mills, traders, contractors, clinics, hotels and transport operators in Gorakhpur, Basti and Ayodhya fall into this net more often than they expect, because turnover is computed as per the Act, not as per a GST dashboard alone.
The full note is in Tax audit under section 44AB — who needs it.
What the file must support
- Method of accounting and any change, with effect on profit.
- Quantitative stock where the business is of a kind that keeps it — agro-processing and trading in Basti and Gorakhpur almost always do.
- Loans, deposits and repayments tested against sections 269SS and 269T.
- Payments to related persons, directors and specified persons under section 40A(2)(b).
- TDS/TCS defaults that may trigger section 40(a)(ia) disallowance.
- GST turnover reconciled to the books and to GSTR-1 / GSTR-3B / e-way bills.
- Deemed income under sections 56, 43CA, 50C and similar, where land or building has changed hands — common in Ayodhya’s present property market.