For income of FY 2025-26, the tax audit is still governed by section 44AB of the Income-tax Act, 1961, and the report is in Form 3CA or 3CB with Form 3CD. The department’s guidance puts the date for the report one month before the return due date, which was 30 September 2026 where the return was due on 31 October. Six weeks is enough if the work is laid out in order.
Update, 3 October 2026. CBDT Circular No. 07/2026 of 28 September 2026 extended the audit-report date to 21 October 2026 and the return date to 21 November 2026 for the category it names. The sequence below is unchanged; only the dates move. See the note on the extension.
Week 1: confirm the audit applies
Test the turnover limits against the books: business turnover above Rs 1 crore (Rs 10 crore where cash receipts and payments are each 5 per cent or less of the totals), or professional receipts above Rs 50 lakh, or a presumptive case that calls for an audit. Decide whether the accounts are also audited under another law, since that decides whether the report is in Form 3CA or 3CB. Agree the scope with the client in writing.
Week 2: close and agree the books
- Trial balance agreed to the ledgers; financial statements agreed to the trial balance.
- Bank, loan, debtor, and creditor balances confirmed at 31 March 2026.
- Fixed asset register and depreciation agreed to both the accounts and the tax computation.
Week 3: gather the particulars Form 3CD asks for
Form 3CD asks for many facts that are not in the trial balance: loans and deposits taken or repaid in cash, payments above the cash limits, amounts of the year that are deductible only when paid, brought-forward losses, and details of tax deducted and collected. Prepare a data sheet for each, with the document that supports it.
Week 4: reconcile withholding and indirect tax
- Compare payments with the TDS and TCS statements filed: what was deducted, what was deposited, and what was not reported.
- Agree the GST in the accounts with the returns filed, and list the differences with reasons.
Week 5: draft and review
Draft the report and the statement of particulars. A second person reads the draft against the working papers. Queries to the client are cleared in writing, and any qualification is worded with its financial effect.
Week 6: sign, generate the UDIN, and upload
The auditor signs the report, generates a UDIN, and uploads it on the portal. The assessee then accepts it. Leave a few days between the upload and the date, because the acceptance step needs the client to act.
What happens if the audit is missed
Under the 1961 Act, section 271B provides a penalty for failure to get accounts audited or to furnish the report, and its measure is the lesser of 0.5 per cent of turnover or gross receipts and Rs 1,50,000. For tax years from 2026-27, section 446 of the 2025 Act carries the same measure.
Looking ahead to Form 26
From tax year 2026-27, the report moves to Form No. 26 under section 63. It is worth keeping this year’s data sheets in a form that can be reused. See the note on section 63 and Form 26.
Records to keep ready
- Trial balance, ledgers, and financial statements
- TDS and TCS returns as last corrected, with challans
- GST returns and the reconciliation to the books
- Fixed asset register, loan and deposit details, and cash payment listings