Quick Summary
Audit verifies the accuracy and fairness of financial records and statements.
An audit is an independent examination of a business's books, vouchers and financial statements to verify that they give a true and fair view and comply with the applicable law. In India a single entity can face more than one type of audit, each governed by a different statute and turnover threshold.
Statutory audit
Every company registered under the Companies Act, 2013 must have its accounts audited by a practising Chartered Accountant, regardless of turnover or profit. The auditor is appointed under Section 139 and reports under Section 143. An LLP is audited only if its turnover exceeds ₹40 lakh or its capital contribution exceeds ₹25 lakh.
Tax audit — Section 44AB
Under the Income-tax Act, 1961, a tax audit is triggered when business turnover crosses ₹1 crore, extended to ₹10 crore where both cash receipts and cash payments stay within 5% of the total. For professionals the limit is ₹50 lakh of gross receipts. The report is furnished in Form 3CA or 3CB together with Form 3CD, generally by 30 September of the assessment year.
GST reconciliation
The earlier CA-certified GST audit under Section 35(5) of the CGST Act was withdrawn with effect from 1 August 2021. Registered persons with aggregate turnover above ₹5 crore now file a self-certified reconciliation statement in Form GSTR-9C alongside the annual return GSTR-9, rather than a formal auditor certificate.
Key Points
- Statutory audit mandatory
- By Chartered Accountant
- Tax audit at ₹1 crore
- GST audit at ₹5 crore
- Independent verification