Tax audit under Section 44AB of the old Act (now Section 194 of the Income-tax Act 2025) is mandatory for businesses and professionals above specified turnover/receipt thresholds. While the core requirement is unchanged, the new Act has renumbered the section, revised the report forms, and introduced additional reporting clauses for digital transactions, presumptive taxation, and GST reconciliation. For Tax Year 2026-27 (April 2026 onwards), CAs must file the new-format audit report by 30 September 2026. This guide covers every change.
| Category | Old Section | New Section | Threshold (Tax Year 2026-27) |
|---|---|---|---|
| Business (general) | 44AB(a) | 194(1)(a) | Turnover exceeds ₹1 crore |
| Business — digital transactions (95%+) | 44AB(a) proviso | 194(1)(a) proviso | Turnover exceeds ₹10 crore (if 95%+ receipts and payments are digital) |
| Profession (general) | 44AB(b) | 194(1)(b) | Gross receipts exceed ₹50 lakh |
| Presumptive scheme opted — income below prescribed rate | 44AB(d) | 194(1)(d) | Applicable if presumptive profit declared is lower than prescribed percentage AND income exceeds basic exemption |
| Business loss — no presumptive scheme | 44AB(e) | 194(1)(e) | Applicable if book profits declared under normal provisions |
The old Act used Form 3CA (audit report where statutory audit done), Form 3CB (other cases), and Form 3CD (statement of particulars). The Income-tax Rules 2026 (notified in June 2026) replace these with:
| Clause Area | Old Form 3CD | New Form 6CD Change |
|---|---|---|
| GST turnover reconciliation | Clause 44 — indirect tax payments | Enhanced — GSTR-1 vs books vs Form 26AS reconciliation mandatory |
| TDS non-deduction | Clause 21(b) | New section references (Section 393/392) must be cited |
| Payments to MSME vendors | Clause 22 | Section 43B(h) (new: Section 54(h)) — 45-day rule violations must be quantified |
| International transactions | Clause 30B | Enhanced — FEMA and TP documentation cross-reference required |
| Digital payment ratio | Not present | New clause — report percentage of receipts via digital mode (determines ₹10 crore threshold applicability) |
| Bonus/gratuity provisions | Clause 20(b) | Section 54(a)/(b) equivalent — computation under new Act must be stated |
Kavita, a Bengaluru-based CA, is conducting the first tax audit of a 3-year-old SaaS startup with ₹8 crore turnover (Tax Year 2026-27). All receipts and 97% of payments are digital — so the ₹10 crore digital threshold applies, meaning no audit was required under the digital exception. But the company declared presumptive income at a rate lower than 8% of turnover (under Section 58, new Act), triggering mandatory audit under Section 194(1)(d).
The audit is triggered not by turnover but by the presumptive income election being lower than the prescribed rate. Kavita verifies: (a) GST GSTR-3B vs books reconciliation — ₹12 lakh difference (timing — Q4 invoice raised on 31 March, GSTR-1 filed in April); (b) 3 MSME vendor payments delayed beyond 45 days — ₹4.8 lakh to be disallowed under Section 54(h); (c) ESOP accounting — valued correctly. She flags all in Form 6CD and completes the audit by 25 September 2026.
| Parameter | Details |
|---|---|
| Audit due date — Tax Year 2026-27 | 30 September 2026 |
| Extension (if applicable) | By CBDT notification — typically no automatic extension |
| Penalty for missed audit | Section 406 — 0.5% of turnover or ₹1.5 lakh, whichever is lower |
| ITR due date for audit cases | 31 October 2026 |
| Form for filing audit report | Form 6CA/6CD on income tax e-filing portal (CA login) |