Books that pass every audit, every year.
Bookkeeping is the compliance base where the biggest tax and Companies Act exposures live. Under Section 44AB of the Income Tax Act 1961, businesses with turnover above ₹1 crore (or ₹10 crore if cash ≤5% both ways) and professionals above ₹50 lakh face mandatory tax audit — Form 3CA/3CB + Form 3CD (44 clauses, amended 1 April 2025) — by 30 September after the financial year ends. Miss it: Section 271B penalty 0.5% of turnover, max ₹1,50,000. Under Sections 128-129 of Companies Act 2013, every company and LLP must maintain double-entry books at registered office, preserved for 8 years, complying with Schedule III + Ind AS (if net worth ≥ ₹250 Cr) or AS (for others). CARO 2020 (21 clauses) applies to most companies except small ones under Section 2(85). Cash discipline under Section 40A(3) (₹10K expense limit), 269SS/269T (₹20K loan limit) silently disallows tax deductions for cash violations. The Income Tax Act 2025 from 1 April 2026 replaces Section 44AB with Section 63 and Form 3CD with Form 26. We handle the full stack: Tally/Zoho/QuickBooks bookkeeping, 4-way monthly reconciliation, tax audit prep, statutory audit coordination, and CARO 2020 support.
- Monthly bookkeeping · sales/purchase/expense entries · Tally/Zoho/QB
- Bank + credit card + GST + TDS reconciliations (all four monthly)
- Trial balance + monthly P&L + management dashboard by 15th
- Section 44AB tax audit prep · Form 3CA/3CB + Form 3CD (44 clauses)
- Section 128/129 Companies Act compliance · Ind AS or AS mapping
- Year-end statutory audit coordination + finalisation
The accounting framework in 2026
Two parallel laws govern books: Companies Act 2013 Sections 128-129 (books + financial statements) and Income Tax Act 1961 Section 44AB (tax audit). Plus IT Act 2025 transition from 1 April 2026.
Every entity choice unlocks different obligations:
- Companies + LLPs — mandatory double-entry books at registered office (Sec 128), Schedule III + AS/Ind AS financials (Sec 129), statutory audit under Section 143, CARO 2020 if not exempt
- Proprietors + firms > ₹1 Cr — Section 44AB tax audit mandatory, Form 3CA/3CB + Form 3CD
- Professionals > ₹50L — Section 44AB(b) tax audit, or Section 44ADA presumptive up to ₹75L
- Small businesses ≤ ₹2 Cr — Section 44AD presumptive available (individuals/HUFs/firms only)
Cash discipline penalties silently drain profits:
- Section 40A(3) — expense > ₹10K in cash = 100% disallowed for tax
- Section 269SS — loan accepted > ₹20K cash = 100% penalty
- Section 269T — loan repaid > ₹20K cash = 100% penalty
Ind AS applicability by size:
- Listed companies + all Group companies
- Unlisted with net worth ≥ ₹250 crore
- NBFCs with net worth ≥ ₹500 Cr / ₹250 Cr (phased)
- All others use AS 1-32 (simpler)
Enforcement:
- Section 271B · 0.5% turnover (max ₹1.5L) for missing tax audit
- Section 234A/B/C interest on ITR delay
- Section 447 fraud prosecution for wilful default in books
Maintain full books + audit if you...
- You're a Private Limited/LLP/Public Company — double-entry books mandatory under Sections 128-129 of Companies Act 2013 · financial statements per Schedule III + notified accounting standards
- Your business turnover exceeds ₹1 crore (or ₹10 crore with ≤5% cash) — Section 44AB tax audit mandatory · Form 3CA/3CB + Form 3CD (44 clauses) by 30 September after the financial year ends
- You're a professional with gross receipts > ₹50 lakh (or ₹75 lakh under presumptive Section 44ADA) — tax audit mandatory · Section 271B penalty 0.5% of receipts if missed
- You have GST returns filed monthly/quarterly — your books must reconcile perfectly with GSTR-1 outward supplies and GSTR-3B tax paid · mismatches trigger notices
- You accept investor/bank scrutiny — audited financials with clean CARO 2020 report unlock loans, equity, due diligence · unaudited books fail every serious lender check
- You want to optimize tax outflow — proper expense classification, depreciation planning under Section 32, allowability under Section 37, and provisions save 10-25% of tax annually
Skip / use presumptive if you...
- You're a salaried individual with only Form 16 income — no business books required · ITR-1/ITR-2 sufficient
- You're a freelancer/consultant under ₹50 lakh with presumptive Section 44ADA — 50% deemed profit, no books required if declared per scheme
- You're a very small trader under ₹2 Cr with presumptive Section 44AD — 8% (or 6% digital) deemed profit, no books required (individuals/HUFs/firms only; not LLP/company)
- You're a proprietor with turnover < ₹25 lakh and simple operations — cash-basis records + monthly GSTR-1/3B may suffice · books recommended but not statutorily required
- You already have an internal accountant + external CA on retainer — no duplicate service needed; get in touch if you want an audit-readiness review
What full accounting + audit compliance actually delivers
Every benefit anchored to specific Sections of Companies Act 2013 and Income Tax Act 1961 · reflecting 1 April 2025 Form 3CD amendments and IT Act 2025 transition.
Section 44AB · Tax Audit Compliance
Under Section 44AB of the Income Tax Act 1961, businesses with turnover above ₹1 crore (₹10 crore if cash ≤5% both receipts + payments) and professionals above ₹50 lakh (₹75 lakh with digital) must get accounts audited by a Chartered Accountant. Tax audit involves Form 3CA (companies) or Form 3CB (others) + Form 3CD (44 clauses). Filed electronically on the Income Tax portal by 30 September after the financial year ends. Missing this triggers Section 271B penalty at 0.5% of turnover, max ₹1,50,000. Form 3CD amended significantly from 1 April 2025 requiring updated disclosures on GST, TDS, related party, and depreciation.
Sections 128-129 · Companies Act Books
Under Section 128 of Companies Act 2013, every company must maintain books of account at registered office giving a true and fair view. Books to be preserved for 8 years. Under Section 129, financial statements must comply with Schedule III format + notified accounting standards (Ind AS or AS). Ind AS applies mandatorily to listed companies, unlisted with net worth ≥ ₹250 Cr, and specific NBFCs. All others follow Accounting Standards (AS 1-32). Directors and CFO personally responsible. Failure to comply attracts fines and Section 447 fraud prosecution for wilful misstatement.
Section 44AD/44ADA · Presumptive Advantage
Small businesses and professionals can opt for presumptive taxation to skip full bookkeeping. Section 44AD (individuals/HUFs/partnership firms, NOT LLPs or companies) declares 8% deemed profit (6% digital receipts) for turnover up to ₹2 crore. Section 44ADA for specified professionals declares 50% deemed profit for gross receipts up to ₹75 lakh. 5-year lock-in — exit before completion triggers mandatory tax audit even if turnover stays low. We help evaluate the trade-off: presumptive saves compliance cost but forfeits business expense deductions and limits ITR options.
Multi-Source Reconciliation · Zero Mismatches
The strongest bookkeeping foundation is reconciliation across 4 dimensions: bank statements (all accounts, credit cards, wallets), GST returns (GSTR-1 outward vs sales register, GSTR-2B ITC vs purchase register, GSTR-3B tax paid vs P&L), TDS returns (24Q/26Q/27Q vs expense ledgers, Form 26AS vs revenue), and vendor/customer subledgers. Monthly reconciliation catches errors early — a ₹47 lakh missing ITC in one client's reconciliation is recoverable within a quarter; discovered a year later, it's lost forever. Our monthly close is designed around zero unexplained variances.
Section 40A(3) / 269SS / 269T · Cash Discipline
The Income Tax Act penalises heavily for cash transactions above thresholds. Section 40A(3): any expense above ₹10,000 paid in cash is fully disallowed for tax purposes. Section 269SS: accepting loan/deposit above ₹20,000 in cash triggers 100% penalty. Section 269T: repayment of loan above ₹20,000 in cash triggers 100% penalty. Combined with the ₹10 crore enhanced 44AB threshold (which needs 5% cash cap both ways), businesses must transition to digital-first payments. Our bookkeeping flags cash violations daily; we've saved ~₹1.2 Cr in Section 40A(3) disallowances across 300+ clients.
Statutory Audit + CARO 2020 · Investor-Grade Books
Beyond tax audit, companies also need Statutory Audit under Section 143 of Companies Act which certifies financial statements as true and fair. This includes CARO 2020 (Companies (Auditor's Report) Order 2020) — a detailed 21-clause report on inventory, loans, deposits, related parties, statutory dues, going concern, and internal financial controls. CARO applies to all companies except OPCs, small companies, private companies with paid-up ≤ ₹1 Cr and turnover ≤ ₹10 Cr. Clean CARO 2020 report is essential for bank loans, private equity, IPO readiness, and government tenders. Our bookkeeping is designed to produce CARO-ready books from day one.
Coming soon: the monthly close + year-end cycle
Monthly close → reconciliation → year-end audit → Form 3CD — the full cycle in 2 minutes.
3-stage accounting lifecycle
Green = monthly close (Days 1-15 of every month). Gold = year-end closure (Apr-Jul) with statutory audit preparation. Blue = post-audit filings (Sep-Nov) with critical deadlines. Miss 30 Sep audit and Section 271B penalty triggers.
Monthly Data Collection
Sales register + invoices, purchase bills, bank statements (all accounts), credit card statements, cash vouchers, payroll data, fixed asset additions. Any GST/TDS challans referenced.
Booking Entries
Every sales invoice booked with GST split, every purchase with ITC + TDS tagging, expenses classified per CoA, bank entries matched. Cash entries pre-approved for Section 40A(3) compliance.
4-Way Reconciliation
Books ↔ Bank (all accounts), Books ↔ GSTR-1 outward (sales), Books ↔ GSTR-2B ITC (purchases), Books ↔ Form 26AS (TDS). Any variance > ₹5K investigated within 48 hours.
Adjustments
Depreciation per Section 32 blocks, provisions (bad debts, warranty, bonus), prepaid expense allocation, accrued income, interest on loans, forex gain/loss if applicable.
Delivery
Trial balance, monthly P&L, balance sheet, cash flow (Growth+ plans), management MIS with KPIs and variance analysis, exception report on any unusual items. signed off by a qualified CA from our network.
Audit + 3CD + ITR
Audit trial balance by 30 June, statutory audit Jun-Jul, Form 3CD (44 clauses) by 15 Aug, tax audit filed 15 Sep (15-day buffer), ITR by 15 Oct (16-day buffer). Zero Section 271B risk.
Accounting obligations — 6 scenarios
Documents for accounting + audit
Data flow: raw transactions → software → reconciliation → audit-ready books. Most clients share via secure portal or shared drive. Software access + bank feeds automate ~40% of data entry.
Monthly Data Inputs
- Bank statements (all current + savings + credit card)
- Sales invoices + e-invoice IRN records (if applicable)
- Purchase invoices + expense bills with GST breakup
- Cash transactions with vouchers + approvals
- Payroll data (if not on separate retainer)
- Fixed asset additions + disposals with invoices
Reference Records
- GST returns (GSTR-1, 3B, 2B, 9, 9C) filed
- TDS challans + Form 26AS + Form 16A copies
- ROC filings (AOC-4, MGT-7) prior years
- Statutory audit reports (last 3 FYs)
- Loan agreements + repayment schedules
- Lease/rental agreements + rent receipts
Software + Access
- Tally Prime / Zoho Books / QuickBooks / Busy access
- Bank net banking read-only access (or statements)
- GST portal login for reconciliation
- Chart of Accounts template (or industry-standard)
- PAN + TAN + GSTIN + CIN registration copies
- Digital signature (DSC) for tax filings
Calculate your accounting + audit cost
Enter your entity type, turnover, transaction volume, and cash percentage. See exact monthly + annual cost in real time. Auto-detects Section 44AB audit requirement, presumptive eligibility, and Section 271B penalty avoided.
Books-based vs Presumptive vs Enterprise · Which framework suits you?
16 dimensions comparing full books + tax audit vs Section 44AD/44ADA presumptive vs Small Company (Section 2(85)) framework. Choose based on entity type, turnover, and business complexity.
| Criteria | Full Books + Audit | Presumptive (44AD/ADA) | Small Company (Ind AS Exempt) |
|---|---|---|---|
| Applicable entities | All companies, LLPs, and businesses > threshold | Individuals/HUFs/firms only | Companies with capital ≤ ₹4 Cr AND turnover ≤ ₹40 Cr |
| Turnover threshold | Above ₹1 Cr (or ₹10 Cr digital) | Business ≤ ₹2 Cr · Professional ≤ ₹75L | Small Co ≤ ₹40 Cr |
| Bookkeeping requirement | Full double-entry + accrual basis | Minimal · basic records | Full books + AS |
| Tax audit under Sec 44AB | Mandatory (Form 3CA/3CB + 3CD) | Not required if scheme followed | Required if turnover > ₹1 Cr |
| Statutory audit (Companies Act) | Mandatory · Sec 143 + CARO 2020 | N/A (not applicable to companies) | Mandatory · CARO exempt if criteria met |
| Profit declared | Actual (books-based) | 8% (6% digital) business · 50% professional | Actual (books-based) |
| Expense deductions | All allowable + depreciation Sec 32 | None (deemed profit) | All allowable + depreciation |
| Compliance cost/year | ₹60K-₹4L (books+audit+filings) | ₹10K-₹30K (ITR only) | ₹40K-₹2L (books+audit+ROC) |
| Investor/bank readiness | Full · CARO 2020 report | Weak · minimal records | Full · minor CARO relaxation |
| Loss carry forward | Full · Sec 72 up to 8 years | Not permitted under scheme | Full · Sec 72 |
| GST/TDS reconciliation | Monthly · 4-way | Basic · risk of GST notices | Monthly · 4-way |
| Ind AS applicability | If net worth ≥ ₹250 Cr | N/A | AS (not Ind AS) |
| Form 3CD (44 clauses) | Full disclosure required | Not applicable | If audit triggered |
| Section 271B penalty risk | Zero if audit filed on time | Zero (no audit) | Zero if audit filed on time |
| IT Act 2025 impact (from FY 26-27) | Sec 63 + Form 26 replaces 44AB/3CD | Continues with modifications | Sec 63 + Form 26 |
| Our monthly fee | ₹2,500-24,999 | ₹1,499 (ITR only support) | ₹2,500-9,999 |
India accounting map · 6 frameworks in one chart
Every accounting compliance categorised by trigger: Section 44AB thresholds (business/professional), Companies Act Sections 128-129 (books + Ind AS/AS), Section 44AD/44ADA presumptive, cash discipline (40A(3)/269SS/269T), Form 3CA/3CB/3CD (44 clauses), and CARO 2020. IT Act 2025 transition banner. Section 271B enforcement.
Sign-up to audited books · The 12-month path
4 critical milestones. From CoA setup (Days 1-3) to statutory + tax audit coordination (annual). Historical catch-up if books are behind. Standard monthly close by 15th of following month.
Software + Chart of Accounts setup
We audit your current books (or start fresh). Software selection: Tally Prime, Zoho Books, QuickBooks, or Busy based on your workflow. Chart of Accounts customised for industry — 200-400 ledgers typical. Opening balances imported from last audited financials. GST/TDS/PAN linkages configured. Bank feeds enabled where available.
Wrong CoA design at onboarding = 6 months of re-tagging laterHistorical catch-up + first close preview
If books are behind, we catch up prior 3-6 months at accelerated pace. All sales/purchase/expense entries booked. Bank reconciliation for those months completed. First close-preview P&L shared for review. GST returns compared to book entries to catch mismatches.
Backlog beyond 6 months adds ₹2K per catch-up monthFirst monthly close delivered
Standard monthly close cycle begins: all entries booked by 7th of following month, reconciliations done by 10th, monthly P&L + trial balance + MIS dashboard delivered by 15th. Any exception flags shared. GST returns filed with 5-day buffer (Growth+ plans include this).
Missing invoices/receipts delay close beyond 15thStatutory + tax audit coordination
By March 31, we've reconciled all quarterly closes. April-July: audit trial balance prepared, auditor (yours or ours) receives complete books + supporting schedules. Form 3CA/3CB + Form 3CD (44 clauses) drafted by 15 August. Tax audit filed by 30 September (buffer before deadline). ITR filed by 31 October.
Section 271B: 0.5% turnover penalty if audit misses 30 Sep6 common accounting mistakes — and how to avoid them
#1 fatal: assuming ₹10 Cr enhanced threshold applies without checking 5% cash rule. Costliest: Section 40A(3) cash disallowances. Trap: late audit cascading Section 271B + 234A + 234F.
Assuming ₹10 Cr enhanced threshold applies without checking 5% cash rule
The most common tax audit trap. Businesses assume they qualify for the ₹10 crore enhanced Section 44AB threshold because "most transactions are digital." The test is binary and independent: BOTH cash receipts AND cash payments must each be ≤ 5% of total. A single large cash payment for equipment, or petty cash receipts crossing 5%, disqualifies the entity. Business goes back to ₹1 crore threshold. Missing this triggers Section 271B penalty at 0.5% of turnover, max ₹1,50,000 — plus scrutiny risk.
Ignoring Section 40A(3) cash expense limit of ₹10,000
Under Section 40A(3) of Income Tax Act, any single expense paid in cash above ₹10,000 is 100% disallowed for tax purposes. For transport contractors, the limit is ₹35,000. Common violations: paying supplier ₹15,000 cash for immediate delivery, splitting a ₹50,000 cash payment across 5 vouchers (still triggers if same day, same vendor), petty cash reimbursements without receipts. For a ₹10 lakh cash expense that shouldn't have been, that's ₹10 lakh added to taxable income = ~₹3 lakh extra tax. Books that don't flag cash violations create silent tax risk.
Late statutory audit + tax audit cascade
The audit deadline of 30 September feels distant in April. Businesses delay: April-June = "audit season is far", July-Aug = "auditor is busy", September = panic. Result: Section 271B penalty 0.5% of turnover (max ₹1.5L) + Section 234A interest on ITR delay + Section 234F fee ₹5,000 or ₹10,000. On a ₹5 Cr turnover, ₹1.5 lakh penalty alone. Worse: tax audit report cannot be filed after ITR due date (31 Oct for audit cases) — the compliance window closes.
Books not reconciling with GST/TDS returns
Common mistake: sales in books ≠ GSTR-1 outward supplies, or expenses claimed ≠ GSTR-2B ITC available. When Income Tax scrutinises via Form 26AS / AIS, mismatches with books trigger notices under Section 143(2). GST scrutiny under Section 61 follows. Once departmental scrutiny begins, reconciliation costs 5-10x more than doing it monthly. Sample: ₹8 Cr trading business had ₹34 lakh ITC in books not in GSTR-2B — recovery through vendor follow-up took 8 months + ₹6L professional fees.
Depreciation errors + wrong Section 32 block
Fixed assets create silent tax loss. Common errors: wrong depreciation rate (computers 40%, plant 15%, buildings 10%), missing block-wise WDV calculation, not claiming additional depreciation Section 32(1)(iia) at 20% for new plant, not claiming 100% for computers ≤ ₹5,000. Or opposite: over-claiming depreciation triggers scrutiny + penalty. For a manufacturer with ₹2 Cr new plant, missing 20% additional depreciation = ₹40L undeclared deduction = ₹12L extra tax paid.
Form 3CD 44-clause disclosure gaps
The Form 3CD (44 clauses) filed alongside tax audit report is where CPC-IT catches most disclosure gaps. Common misses: clause 21(b) inadmissible expenses (personal, capital, disallowed), clause 22 GST reconciliation with books, clause 26 payments to related parties, clause 34 TDS details, clause 44 breakup of expenditure to GST-registered vendors. Form 3CD amended from 1 April 2025 with additional disclosures. Wrong or missing disclosure = auditor personal liability + ITR notice + potential Section 271AAB penalty (10-30% of undisclosed income).
Pick your plan
Small business / proprietor? ₹2,500/mo Starter. Growing Pvt Ltd / LLP? ₹7,500/mo Growth (full 4-way recon + tax audit). Multi-entity or Ind AS applicable? ₹25,000/mo Enterprise + CFO.
- Monthly bookkeeping · up to 200 transactions
- Bank reconciliation (up to 2 accounts)
- GSTR-1 + 3B data extract for filing
- Monthly P&L + trial balance by 15th
- Basic MIS dashboard (revenue/expense/margin)
- Year-end books finalisation
- Section 44AB audit prep (if applicable)
- ITR-3 filing support (proprietor)
- Statutory audit fees separate · ROC filing separate
- Everything in Starter Books Plan +
- Unlimited transactions monthly
- Full 4-way reconciliation (bank/GST/TDS/vendor)
- Monthly management P&L + cash flow + ratios
- Fixed asset register + Section 32 depreciation
- Payroll integration (up to 30 employees)
- GST + TDS return filing (bundled)
- Tax audit Form 3CA/3CB + 3CD preparation
- Statutory audit coordination + support
- Quarterly CFO review call
- CARO 2020 report separate · XBRL filing separate · Litigation separate
- Everything in Growth Books Plan +
- Multi-entity consolidation (up to 5 companies)
- Ind AS financial statements (if applicable)
- CARO 2020 report drafting support
- Budget vs actual variance analysis monthly
- Working capital + cash flow forecasting
- Board pack + investor MIS (monthly)
- Transfer pricing documentation
- Statutory audit team on-site coordination
- Dedicated CFO + Finance Manager
- Statutory audit fees separate · Advisory retainer separate
Prefer a call back?
Leave your number and a good time — we call within business hours (Mon–Sat, 10 am–7 pm) about Accounting & Bookkeeping.
Accounting desk
The Tax Paramarsh desk
"Accounting is the layer where most tax leakage happens silently. A single Section 40A(3) cash violation on ₹15,000 supplier payment = ₹15,000 added back to taxable income = ₹4,500 extra tax. Ten such violations across the year? ₹45,000 tax leak nobody notices until the tax audit catches it. That's just cash discipline. Then there's Section 44AB — the tax audit provision. Threshold is ₹1 crore standard, ₹10 crore enhanced if cash ≤ 5% both ways. Businesses assume they qualify for ₹10 crore because 'most is digital' — but a single ₹8 lakh cash payment for equipment disqualifies them, and suddenly the audit deadline of 30 September is real. Miss it: Section 271B penalty 0.5% turnover, max ₹1.5 lakh. Plus Section 234A interest, Section 234F fee, scrutiny notices under Section 143(2). The Form 3CD was amended significantly from 1 April 2025 — 44 clauses now require detailed GST reconciliation (clause 44 — breakup to GST-registered vs unregistered vendors), TDS reconciliation (clause 34), related party disclosures (clause 26). Wrong or missing disclosure = auditor liability + your notice + Section 271AAB penalty 10-30% of undisclosed income. The big transition: Income Tax Act 2025 effective 1 April 2026 — Section 63 replaces 44AB, Form 26 replaces 3CD. Structures similar but software and processes need updating now. Our books produce Form 3CD-ready disclosures from day one. Monthly close by 15th, quarterly review by end of next quarter, year-end audit trial balance by 30 June (3-month buffer), tax audit filed by 15 September (15-day buffer before deadline). And on Companies Act side — Sections 128-129 require double-entry at registered office, Schedule III + AS/Ind AS. Ind AS mandatory if net worth ≥ ₹250 crore. All companies except OPCs + small companies get CARO 2020 report — 21 clauses on inventory, loans, statutory dues, related parties, going concern. Clean CARO unlocks bank loans, PE investments, government tenders. Boring is the goal in accounting."
What businesses say after our accounting retainer
Common questions
Straight answers on 2026 accounting + tax audit. Still curious? WhatsApp us anything.
What is Section 44AB tax audit and when does it apply?
Section 44AB of the Income Tax Act 1961 is the tax audit provision. It requires certain taxpayers to get their accounts audited by a Chartered Accountant and file a tax audit report on the Income Tax portal.
Who must get audited under Section 44AB for FY 2025-26 (AY 2026-27):
- Business (Section 44AB(a)):
- Standard threshold: turnover > ₹1 crore in FY
- Enhanced threshold: turnover > ₹10 crore IF cash receipts ≤ 5% of total receipts AND cash payments ≤ 5% of total payments (both conditions must be met independently)
- Profession (Section 44AB(b)):
- Standard threshold: gross receipts > ₹50 lakh
- Enhanced threshold: > ₹75 lakh with same 5% cash rule
- Presumptive scheme exits (Section 44AB(c)/(d)/(e)): If you opted into Section 44AD/44ADA earlier and now declare income below the deemed rate (with total income above basic exemption), audit is mandatory even if turnover is low.
Tax audit forms:
- Form 3CA — when accounts are already audited under another law (Companies Act, LLP Act). Companies + LLPs typically use this.
- Form 3CB — when no other audit is required. Independent audit certification. Proprietors + firms typically use this.
- Form 3CD — mandatory 44-clause statement of particulars, accompanies both 3CA and 3CB. Amended significantly from 1 April 2025 with new disclosures on GST, TDS, related party, depreciation.
Due dates for FY 2025-26 (AY 2026-27):
- Tax audit report: 30 September 2026
- ITR filing (audit cases): 31 October 2026
- Transfer pricing report cases: 30 November 2026
Penalty for non-compliance (Section 271B):
- 0.5% of turnover or gross receipts
- Maximum: ₹1,50,000
- Applies whether audit is not done at all or not filed on time
- Waiver only for reasonable cause (Section 273B) — narrowly interpreted
Income Tax Act 2025 transition:
- From FY 2026-27 (Tax Year 2026-27), Section 63 of ITA 2025 replaces Section 44AB
- Form 26 replaces Form 3CD
- Rate structures and thresholds substantively similar
- Return utilities and reporting software being updated
When can I use Section 44AD/44ADA presumptive taxation?
Presumptive taxation lets small taxpayers declare a fixed percentage of turnover as profit — no need for full books or tax audit. Two main schemes:
Section 44AD — Small Business:
- Who can opt in: Resident individuals, HUFs, and partnership firms (NOT LLPs, NOT companies)
- Turnover limit: ≤ ₹2 crore in the FY
- Deemed profit: 8% of turnover (or 6% for digital/banking channel receipts)
- Excluded businesses: Commission/brokerage, agency, transport (goes to 44AE), professionals (goes to 44ADA)
- Books requirement: Basic records only, no full books, no audit
- Lock-in: Once opted in, must continue for 5 consecutive years. Exit within 5 years triggers mandatory tax audit under Section 44AB(e) for the exit year.
Section 44ADA — Specified Professionals:
- Who can opt in: Individuals + partnership firms carrying on specified profession under Section 44AA(1) — doctors, lawyers, CAs, engineers, architects, technical consultants, film artists, interior designers, IT professionals
- Gross receipts limit: ≤ ₹75 lakh in the FY (₹50 lakh if cash receipts > 5%)
- Deemed profit: 50% of gross receipts
- Books requirement: None beyond basic records
- Audit: Not required if scheme followed correctly
Section 44AE — Transport:
- Who: Any assessee owning ≤ 10 goods carriage vehicles
- Deemed profit: ₹7,500 per vehicle per month (heavy vehicles) or actual (light)
Advantages of presumptive:
- Massive compliance saving — no full books, no audit, no Form 3CD
- Simpler ITR (ITR-4 Sugam)
- Lower professional fees
- Faster tax filing
Disadvantages:
- No actual expense deduction — pay tax on deemed profit even if actual profit is lower
- Cannot carry forward business losses
- Fixed 5-year lock-in (Section 44AD)
- Cannot claim depreciation separately (deemed to include depreciation)
- Not available to LLPs, companies
When to choose actual books over presumptive:
- Actual profit < deemed profit (real losses or thin margins)
- Business expenses substantial (equipment, employees, marketing)
- Want to carry forward losses to future years
- Bank loan / investor scrutiny where books needed
- Multiple business/professional streams
What are Ind AS vs AS and which applies to my company?
India has two parallel accounting standards frameworks notified under Section 133 of Companies Act 2013:
1. Indian Accounting Standards (Ind AS)
- Converged with International Financial Reporting Standards (IFRS)
- Fair value based, comprehensive, complex
- ~40 standards covering all aspects of financial reporting
- Mandatory for larger entities
2. Accounting Standards (AS 1-32)
- Older framework, primarily historical cost based
- Less complex, more prescriptive
- Applies to entities not required to follow Ind AS
Ind AS applicability (mandatory):
- Phase I (from FY 2016-17):
- Listed companies with net worth ≥ ₹500 Cr
- Unlisted companies with net worth ≥ ₹500 Cr
- Their holding, subsidiary, associate, JV companies
- Phase II (from FY 2017-18):
- All other listed companies
- Unlisted companies with net worth ≥ ₹250 Cr
- Their group entities
- NBFCs (from FY 2018-19 / 2019-20):
- NBFCs with net worth ≥ ₹500 Cr
- Listed NBFCs and their group
- NBFCs with net worth ≥ ₹250 Cr (later phase)
- Banks + Insurance: Separate applicability roadmap
- Companies below thresholds can voluntarily adopt Ind AS
- Once adopted, cannot revert (except in specific circumstances)
- Applicable to subsidiaries automatically
- Fair value: Ind AS extensively uses fair value; AS mostly historical cost
- Revenue recognition: Ind AS 115 uses 5-step model; AS 9 simpler transaction basis
- Leases: Ind AS 116 requires all leases on balance sheet; AS 19 distinguishes operating vs finance
- Financial instruments: Ind AS 109 uses expected credit loss; AS 30/32 uses incurred loss
- Consolidation: Ind AS 110 control-based; AS 21 ownership-based
- Impairment: Ind AS 36 comprehensive; AS 28 simpler
- Ind AS companies use Schedule III Division II format
- AS companies use Schedule III Division I format
- Different presentation and disclosure requirements
- Listed + large unlisted (net worth ≥ ₹250 Cr): Ind AS mandatory
- Small companies (paid-up ≤ ₹4 Cr AND turnover ≤ ₹40 Cr): AS with relaxations
- Medium unlisted companies (₹4-250 Cr net worth): AS by default, Ind AS optional
- LLPs: Neither is mandatory unless converted from Ind AS company
Voluntary adoption:
Key Ind AS vs AS differences:
Format requirements:
What most companies use in 2026:
What is CARO 2020 and when does it apply?
CARO 2020 (Companies (Auditor's Report) Order 2020) is a supplementary reporting framework issued by the Ministry of Corporate Affairs. It requires auditors to include a detailed 21-clause report as part of their audit report for eligible companies, covering areas beyond the standard financial statement audit.
Applicability — CARO 2020 applies to:
- All companies covered under Companies Act 2013
- Including Government companies, foreign companies' Indian branches
Companies EXEMPT from CARO 2020:
- One Person Companies (OPCs)
- Small companies (Section 2(85) — paid-up capital ≤ ₹4 Cr AND turnover ≤ ₹40 Cr)
- Banking companies
- Insurance companies
- Section 8 companies (NGOs)
- Private limited companies with:
- Not a subsidiary of a public company
- Paid-up capital + reserves ≤ ₹1 Cr
- Total borrowings ≤ ₹1 Cr
- Total revenue ≤ ₹10 Cr
21 clauses of CARO 2020:
- Property, plant & equipment (fixed assets)
- Inventory (physical verification, coverage)
- Loans, advances, guarantees, security
- Section 185/186 compliance (loans to directors/related parties)
- Deposits (Sections 73-76)
- Cost records maintenance
- Statutory dues (GST, PF, ESI, income tax, TDS)
- Undisclosed income (surveys, search)
- Term loans utilization
- Fraud reporting
- Managerial remuneration (Section 197)
- Nidhi company matters
- Related party transactions (Section 177 / 188)
- Preferential allotment / private placement
- Non-cash transactions with directors
- NBFC registration status
- Cash losses in financial year
- Resignation of statutory auditor
- Financial ratios and going concern
- CSR fund utilization (Section 135)
- Consolidated financial statements observations
Why CARO 2020 matters:
- Bank loan approvals: Banks scrutinize CARO 2020 heavily — adverse remarks can delay/reject loans
- Investor due diligence: Private equity and VC due diligence relies on CARO 2020 disclosures
- Government tender bids: Many tenders require clean CARO 2020 in past 3 years
- IPO readiness: SEBI requires 3-year clean CARO 2020 for IPO documents
- MCA scrutiny: Adverse CARO findings trigger MCA inspection under Section 206
Common adverse CARO findings that cause problems:
- Delay in statutory dues payment (GST, PF, ESI)
- Related party transactions without proper board approval
- Loans to directors without Section 185 compliance
- Fixed asset register not maintained
- Inventory not physically verified annually
What are the total costs for bookkeeping + audit in 2026?
Our transparent monthly pricing:
- Starter Books Plan: ₹2,500/month — for proprietors, small firms, and small companies with up to 200 monthly transactions. Includes monthly bookkeeping, bank reconciliation (2 accounts), GST/TDS data extract, monthly P&L, tax audit prep if applicable.
- Growth Books Plan: ₹7,500/month — for Private Limited/LLP with turnover up to ₹2 crore. Unlimited transactions, full 4-way reconciliation, management P&L + cash flow, fixed asset register, GST + TDS return filing bundled, tax audit Form 3CA/3CB + 3CD preparation, statutory audit coordination.
- Enterprise Books + CFO: ₹25,000/month — for multi-entity groups, Ind AS applicability, CARO 2020 support. Everything above + multi-entity consolidation (up to 5 companies), Ind AS financial statements, budget vs actual, investor MIS, dedicated CFO + Finance Manager.
Plus GST @ 18% on professional fees (fully available as ITC for GST-registered businesses).
What's NOT included in monthly fees (billed separately):
- Statutory audit fees (paid to independent auditor): ₹25,000-₹5,00,000 based on turnover
- Tax audit signing fees (if we sign as CA): ₹15,000-₹1,00,000
- ROC annual filing (AOC-4, MGT-7, DIR-3 KYC): our ROC service ₹2,500-19,999/year
- GST + TDS return filing (if not bundled): ₹1,499-7,999/month our fees
- Ind AS transition consulting (one-time): ₹1,00,000-₹5,00,000
- XBRL filing (AOC-4 XBRL): ₹15,000-₹40,000/year
- Software licenses (if not bundled): Tally ₹2,000/mo, Zoho Books ₹1,499/mo, QuickBooks similar
- DSC purchase + renewal (₹800-₹1,500 every 2 years per director)
Cost comparison vs in-house accountant:
- Junior accountant: ₹3.6-6L/year salary + PF/ESI + gratuity + software (~₹50K/year) + supervision cost
- Senior accountant + CA supervision: ₹8-15L/year total
- Our Growth Books Plan (annual): ₹1.8L + software
- Saving: 40-70% vs in-house for growing SMEs
Statutory audit fees (paid to independent auditor, ICAI-registered):
- Small Pvt Ltd (turnover ≤ ₹1 Cr): ₹25,000-₹40,000
- Growing Pvt Ltd (₹1-10 Cr): ₹40,000-₹1,50,000
- Mid-size (₹10-50 Cr): ₹1,50,000-₹3,50,000
- Large (₹50-500 Cr): ₹3,50,000-₹15,00,000
- Ind AS + CARO 2020: 20-40% premium
Break-even math:
- Single Section 40A(3) disallowance on ₹10L cash expense: ₹3L extra tax
- Section 271B penalty for late audit: 0.5% turnover, max ₹1.5L
- Missing ₹34L ITC in books: ₹6L tax outflow
- Our annual Growth Plan: ₹1.8L
- ROI: 3-6 months of retainer paid back by avoiding 1-2 compliance failures
Are bookkeeping and audit fees tax deductible?
Yes — all bookkeeping and audit expenses are fully tax deductible under Section 37(1) of the Income Tax Act 1961 as ordinary revenue expenses.
What's fully deductible:
- Our monthly retainer fee (₹2,500 to ₹25,000)
- GST @ 18% on our fees (as ITC if GST-registered, otherwise as expense)
- Statutory auditor fees
- Tax audit signing fees
- Ind AS transition consulting
- Accounting software licenses (Tally, Zoho, QuickBooks)
- CA certification fees for various compliance
- ROC compliance costs
- Employee accountant salaries + benefits
What's NOT deductible:
- Section 271B penalty for late tax audit (bad-in-nature)
- Section 234A/B/C interest on tax dues
- Section 447 fraud-related penalties
- Compounding fees (some interpretations)
GST ITC on our professional fees:
- 18% GST fully creditable if your business is GST-registered
- Our invoice includes GSTIN + flows to your GSTR-2B
- Claim ITC in the month our invoice appears in GSTR-2B
What it costs, all-in:
- Growth Books Plan ₹7,500/month + 18% GST
- If you are GST-registered, the GST on our fee is available as input tax credit
- The fee itself is a deductible business expense
What is Section 271B and how can I avoid it?
Section 271B of the Income Tax Act 1961 is the penalty provision for failing to comply with Section 44AB tax audit requirements. This is the enforcement tool CPC-IT uses most frequently against businesses that cross audit thresholds but skip audit.
Section 271B triggers:
- Failed to get accounts audited under Section 44AB even though required
- Failed to file the tax audit report by the due date (30 September 2026 for FY 2025-26)
- Filed with wrong auditor (not ICAI-registered or having disciplinary action)
- Wilfully filed materially incorrect Form 3CD
Penalty rate:
- 0.5% of turnover, gross receipts, or total sales
- Or ₹1,50,000 — whichever is LOWER
- Cannot exceed ₹1,50,000 in any circumstance
Real penalty examples:
- Business with ₹5 crore turnover, missed audit: 0.5% × 5 Cr = ₹2.5 lakh → capped at ₹1.5 lakh
- Small business with ₹1.5 crore turnover, missed audit: 0.5% × 1.5 Cr = ₹75,000
- Professional with ₹80 lakh receipts, missed audit: 0.5% × 80L = ₹40,000
Section 273B — "Reasonable cause" waiver:
- Section 273B allows waiver of Section 271B penalty if taxpayer proves "reasonable cause"
- Narrowly interpreted by tribunals + courts
- Acceptable "reasonable cause" precedents:
- Death or serious illness of proprietor/director
- Natural disasters affecting books access
- Auditor sudden unavailability with no replacement possible
- Fire or theft destroying books (with police complaint)
- NOT acceptable:
- Auditor busy / no time
- Books not ready
- Ignorance of law
- Turnover exceeded threshold due to unexpected events
Additional consequences beyond Section 271B:
- Section 234A interest at 1% pm on ITR delay (audit cases have 31 October deadline)
- Section 234F fee ₹5,000 (or ₹1,000 if income ≤ ₹5L)
- Scrutiny risk — missing audit often triggers Section 143(2) notice
- Bank loan rejections — unaudited financials rejected by most lenders
- Auditor personal liability — audit-issuing CA can face disciplinary action
How our retainer prevents Section 271B:
- Books closed monthly by 15th of following month
- Audit trial balance ready by 30 June
- Auditor engagement letter signed by 15 July
- Draft Form 3CD prepared by 15 August (45-day buffer)
- Auditor review + signature by 25 August
- Tax audit filed by 15 September (15-day buffer before 30 Sep)
Do I need books if my turnover is below ₹1 crore?
Yes and no — depends on entity type and other factors.
Companies + LLPs (regardless of turnover):
- Books mandatory under Section 128 of Companies Act 2013 (LLP Act 2008 for LLPs)
- Even ₹0 revenue dormant company must maintain books
- Double-entry, accrual basis, at registered office
- Preserved for 8 years
- Non-compliance: fines + Section 447 prosecution risk for wilful default
Individuals + HUFs + Partnership Firms (below Section 44AB threshold):
- Section 44AA: Books required if:
- Income from business/profession > ₹1,20,000 in any of last 3 years, OR
- Turnover > ₹10 lakh in any of last 3 years
- Specified professionals (44AA(1)): Books mandatory regardless if gross receipts > ₹1,50,000
- Books can be simpler — cash book, journal, ledgers, bills/receipts
- Preserved for 6 years
Small business under Section 44AD presumptive:
- If declaring 8% (or 6% digital) deemed profit, no full books required
- Basic records + bank statements suffice
- Cannot claim actual expenses
Salaried individuals with only Form 16 income:
- No books required
- ITR-1 or ITR-2 based on income sources
- Only investment proofs, TDS certificates, capital gains records
Recommended even when not mandatory:
- Bank loan applications: banks need at least 2-3 years books
- Investor scrutiny: PE/VC due diligence needs proper books
- Government tenders: bid eligibility requires audited financials
- Business acquisitions: valuation depends on clean books
- Insurance claims (fire, theft): documented books support claim
Book categories under Section 44AA:
- Cash book
- Journal + ledger
- Sales/purchase register
- Bills of receipt (originals)
- Vouchers for expenditure > ₹50
- Bank statements + reconciliation
Cost-benefit for small taxpayers:
- Presumptive route: ₹1,499/mo (ITR support only), save ~₹36K/year vs full books
- Full books route: ₹2,500/mo Starter Plan, but retain all deductions + investor readiness
- Break-even at ~₹5-8L annual profit: full books usually better if actual profit is lower than presumptive rate
When exactly are the accounting + audit deadlines for FY 2025-26?
Complete FY 2025-26 accounting + audit calendar:
Monthly (throughout FY):
- Sales/purchase/expense entries booked by 5th of following month
- Bank reconciliation completed by 10th
- GST returns filed by 11th (GSTR-1) and 20th (GSTR-3B)
- TDS deposit by 7th of following month
- Trial balance + monthly P&L delivered by 15th
- MIS dashboard delivered by 15th
Quarterly (throughout FY):
- Quarterly TDS returns: 31 July / 31 October / 31 January / 31 May
- Quarterly management P&L review meeting
- Cash flow forecast update
- Working capital review
Year-end (March-September):
- 31 March 2026: Financial year closes
- April 2026: Books closure begins; opening balances rolled forward
- April-May 2026: Final reconciliations across bank/GST/TDS/vendor
- By 30 April: MSME-1 H2 filing (October–March dues)
- By 31 May: Q4 TDS return (Form 24Q/26Q/27Q)
- By 30 May: LLP Form 11 (Annual Return)
- June-July 2026: Audit trial balance prepared; statutory audit begins
- By 30 June: DPT-3 filing; DIR-3 KYC (if applicable year)
- July-August 2026: Statutory audit progress; management representations
- By 30 September:
- Tax audit report (Form 3CA/3CB + 3CD) filed
- AGM held (Section 96 Companies Act)
Post-audit filings (October-November):
- By 31 October:
- ITR filing for audit cases
- AOC-4 within 30 days of AGM (~30 Oct)
- ADT-1 within 15 days of AGM
- LLP Form 8 (Statement of Accounts)
- MSME-1 H1 (April-September dues)
- By 30 November:
- Transfer pricing report cases (if applicable)
- ITR + tax audit for TP cases
- By 29 November: MGT-7/MGT-7A (60 days of AGM)
December cleanup:
- By 31 December: Belated ITR filing (with late fee)
- GSTR-9 Annual Return (for GST turnover > ₹2 Cr)
- GSTR-9C Reconciliation (for GST turnover > ₹5 Cr)
How our retainer schedules everything:
- Monthly close by 15th (5-day buffer before month-end)
- Quarterly reviews with 5-day buffer before due dates
- Audit trial balance ready by 30 June (3-month buffer)
- Tax audit filed by 15 September (15-day buffer)
- ITR filed by 15 October (16-day buffer)
What happens if I miss the tax audit deadline?
Missing the tax audit deadline creates cascading problems:
Immediate consequences (1-30 days late):
- Section 271B penalty: 0.5% of turnover, max ₹1,50,000
- Section 234A interest: 1% per month on tax dues from 1 October (audit cases)
- Section 234F fee: ₹5,000 (or ₹1,000 if income ≤ ₹5L)
- Return status becomes "Under Review" on IT portal
- Refunds delayed indefinitely
Extended default (30-90 days):
- Full Section 271B penalty applies (₹1.5L cap hit)
- Section 234A + 234B + 234C interest accumulate
- Scrutiny risk increases (Section 143(2) notices)
- Bank loan applications delayed (unaudited financials rejected)
Persistent default (beyond 31 October — ITR filing deadline):
- Tax audit report cannot be filed at all for that AY — the compliance window closes
- Belated ITR with late fee still possible until 31 December
- Full Section 271B penalty confirmed
- Return marked as "Non-audit compliant"
Multi-year default:
- Compounding Section 271B penalties across years
- ITR notices under Section 148 for reassessment
- Potential Section 271AAB penalty (10-30% of undisclosed income)
- ROC AOC-4 filing may not be possible without audit report
- Bank scrutiny + potential loan recall
- DIN disqualification cascade if 3-year ROC default follows
Real-world scenarios:
- Manufacturing client (₹8 Cr turnover, FY 2022-23 audit missed): ₹1.5L Sec 271B + ₹42K Sec 234A + ₹5K Sec 234F + ₹1.2L Sec 234B/C = ₹3.17L total penalty. Plus 6-month bank loan delay. Total impact: ~₹8L including business impact.
- IT services client (₹4 Cr turnover, FY 2023-24 audit filed 25 October instead of 30 September): ₹1.5L Sec 271B + ₹8K Sec 234A + ₹5K Sec 234F = ₹1.63L. Filed just before ITR deadline, so ITR salvageable.
- Professional client (₹65 lakh receipts, no audit thinking presumptive applies but had opted out): ₹32,500 Sec 271B + scrutiny notice. Escalated to ₹1.5L in professional fees + interest.
Rescue paths:
- File belated audit + ITR: Pay Section 271B + interest + late fees. Available until 31 October (ITR deadline).
- Section 273B reasonable cause petition: Prove death/illness/disaster. Success rate low but possible.
- Section 148 reassessment (later years): Full audit + fresh ITR + settlement.
- Vivad Se Vishwas scheme (when active): Settle at 50-100% of tax, waive interest.
Prevention (what our retainer delivers):
- Books ready by 30 June (3-month buffer)
- Auditor draft by 31 July
- Form 3CD by 15 August
- Audit filed by 15 September (15-day buffer)
- ITR filed by 15 October (16-day buffer)
How does the monthly closing cycle actually work?
A well-designed monthly close is the backbone of accurate financials. Here's our standard cycle:
Days 1-3 of new month — Data collection:
- Sales register + invoice copies for previous month
- Purchase invoices + expense bills
- Bank statements (all accounts)
- Credit card statements
- Cash transaction vouchers
- Payroll data (if internal)
- Any new fixed asset invoices
- Loan repayment schedules if applicable
Days 3-7 — Booking entries:
- Sales entries: Invoice-wise with GST tax split (CGST/SGST/IGST), customer ledger, GSTR-1 tagging
- Purchase entries: Vendor-wise with ITC tagging, GSTR-2B reconciliation preview, TDS if applicable
- Expense entries: Classified per Chart of Accounts, GST + TDS where applicable, cash vs bank
- Bank entries: Every deposit + withdrawal booked with correct ledger tagging
- Adjustment entries: Prepaid expenses, accrued income/expenses, provisions
Days 7-10 — Reconciliation:
- Bank reconciliation: Match every bank entry against book entry; identify unmatched items (cheques in transit, bank charges, interest)
- GST reconciliation:
- Sales ↔ GSTR-1 outward (differences highlighted)
- Purchases ↔ GSTR-2B ITC available (unclaimed / mismatched flagged)
- Tax paid ↔ GSTR-3B (any short deposit visible)
- TDS reconciliation: TDS deducted ↔ challans deposited ↔ Form 26AS ↔ vendor ledgers
- Vendor/Customer reconciliation: Sub-ledger balances confirmed via statements
Days 10-13 — Adjustments + Finalisation:
- Depreciation entries per Section 32 (or Ind AS 116 for right-of-use)
- Provisions (bad debts, warranty, bonus, gratuity)
- Prepaid expense allocation
- Accrued income booking
- Interest on loans (accrual basis)
- Foreign exchange gain/loss (if applicable)
Days 13-15 — Delivery:
- Trial balance — all ledgers balanced
- Monthly Profit & Loss — revenue, expenses, EBITDA, net profit
- Monthly Balance Sheet — assets, liabilities, equity
- Monthly Cash Flow (Growth+ plans) — operating, investing, financing
- Management MIS — KPIs, ratios, variance vs budget
- Exception report — anything unusual, cash violations, GST mismatches
Ongoing:
- Fixed asset register updated with any new additions
- Loan schedules updated (EMI + principal breakup)
- Investment records updated
- Advance tax computation for next quarter
Quarterly + Year-end additions:
- End of quarter: Advance tax computation, quarterly TDS reconciliation, GST audit prep (if turnover crossing thresholds)
- Year-end: Full physical inventory verification, fixed asset physical verification, provisions review, going concern assessment, tax computation, audit prep
Quality checkpoints in our workflow:
- Every entry has a source document reference
- Every GL account has 2-tier peer review before month-close
- Any variance > ₹5,000 investigated within 48 hours
- Monthly close signed off by a qualified CA from our network before delivery
- Any Section 40A(3) cash violation flagged same day
What is Form 3CD and what are its 44 clauses about?
Form 3CD is the mandatory statement of particulars that accompanies every tax audit report (Form 3CA or Form 3CB) filed under Section 44AB. It contains 44 detailed clauses covering all aspects of the taxpayer's books and tax positions.
Purpose:
- Standardized disclosure format for tax audits
- Enables Income Tax Department to review key positions
- Auditor personally certifies the accuracy of disclosures
- Amended significantly from 1 April 2025 with new clauses and additional disclosures
Structure — 44 clauses grouped:
Basic information (Clauses 1-8):
- Name of assessee
- Address
- PAN
- Whether liable for GST/other indirect tax registration
- Status (company, firm, individual etc)
- Previous year
- Assessment year
- Indicate relevant clause of Section 44AB triggering audit
Books + accounting (Clauses 9-14):
- If firm/AOP — partners/members and their shares
- Nature of business/profession
- Books maintained + location
- Books examined during audit
- Method of accounting employed (cash/mercantile)
- Change in method of accounting
- Method of stock valuation
Depreciation + income (Clauses 15-22):
- Amounts admissible under Section 33AB, 33ABA, 33AC
- Amounts brought to charge which were not credited to P&L
- Amount deemed as receipt under Section 41
- Where consideration less than book value/FMV per Section 43CA/50C
- Depreciation allowable under Section 32
- Section 35 expenditure (scientific research)
- Section 36 deductions
- Section 37 general expenditure
Statutory dues + payments (Clauses 21-27):
- Details of amount debited to P&L being expenses of prior period, personal, capital, disallowed under Section 40, 40A(3) cash violations, related party
- Amounts under Section 40(b)/40(ba) (partner remuneration/interest)
- Amounts under Section 43B (statutory dues on due basis)
- Modvat/Cenvat/Duty drawback details
- Loans/deposits accepted (Section 269SS) or repaid (Section 269T)
- Statutory dues (GST, PF, ESI, income tax) — timing of payment
- Section 145A adjustments for inclusive/exclusive method
Tax positions + adjustments (Clauses 28-35):
- Whether assessee received property without/for less than FMV consideration
- Section 43CA/50C on immovable property
- Section 56 income from other sources
- Nature of MAT/AMT credit
- Section 32AC/AD deduction claim details
- Section 43B disallowance details
- Section 73/73A/74 losses c/f
- Section 44AE/44B/44BB/44BBA/44BBB presumptive claims
Depreciation + assets (Clauses 32-34):
- Depreciation schedule under Section 32 (block-wise)
- ISI/BIS quality certification (if applicable)
- TDS/TCS details
Miscellaneous compliance (Clauses 34-44):
- Section 269SS/269T loans in cash
- Section 43CA immovable property
- ICDS compliance
- Sale of scrap/other transactions
- Section 269ST transactions above ₹2 lakh
- Section 92 international transaction/domestic TP
- Section 271AAB penalty relief
- Section 40A(2) related party payments
- Section 92D transfer pricing documentation
- Clause 44 — Breakup of expenditure to GST-registered vs unregistered vendors (added post-GST)
Common Form 3CD problem areas:
- Clause 21(b) — inadmissible expenses often understated
- Clause 22 — GST reconciliation with books often overlooked
- Clause 26 — related party transactions incomplete disclosure
- Clause 34 — TDS details mismatched with 24Q/26Q
- Clause 44 — GST-registered vs unregistered vendor split often skipped
Let's get your books on autopilot.
WhatsApp us your entity type + turnover + current bookkeeping status. Free books audit + Section 44AB threshold assessment. Starter at ₹2,500/mo. Growth at ₹7,500/mo. Enterprise+CFO at ₹25,000/mo. Zero missed tax audit deadlines — starts on day one.