The Institute of Chartered Accountants of India (ICAI) has officially released the Tenth Edition (Revised 2025) of its authoritative “Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961.” This comprehensive document, published by ICAI’s Direct Taxes Committee, serves as a vital resource for Chartered Accountants (CAs), tax professionals, and businesses navigating the ever-evolving landscape of tax audit compliance.
A Decades-Long Pillar of Professional Guidance
First introduced in 1985, shortly after the enactment of Section 44AB by the Finance Act, 1984, the Guidance Note has been periodically updated to incorporate statutory changes, judicial pronouncements, and emerging professional practices. The 2025 revision reflects amendments brought in by the Finance (No. 2) Act, 2024 and the Finance Act, 2025, along with updates to Form No. 3CD via CBDT Notifications No. 27/2024 and 23/2025.
Why This Edition Matters
According to CA Charanjot Singh Nanda, President of ICAI, the need for this revision stems from growing complexity in tax laws and increased reporting requirements. “Chartered Accountants play an indispensable role in ensuring transparency, compliance, and trust. This revised edition is a critical tool for navigating today’s complex tax audit framework,” he noted in the foreword.
CA Piyush S. Chhajed, Chairman of the Direct Taxes Committee, emphasized that the revised edition aims to simplify and standardize tax audit practices, enabling professionals to deliver more accurate and reliable audit reports.
Major Highlights of the 2025 Revised Edition:
- Updated Section 44AB Audit Thresholds:
- Businesses with turnover exceeding ₹1 crore are liable for tax audit.
- However, the threshold increases to ₹10 crore if cash receipts and payments are limited to 5% or less.
- For professionals, the threshold remains ₹50 lakh.
- Expanded Coverage of Presumptive Taxation:
Provisions affecting those under Sections 44AD, 44ADA, 44AE, 44BB, and 44BBB have been detailed, including cases where income is declared below presumptive levels. - Revamped Form No. 3CD Reporting:
- Amendments in clauses related to depreciation, PF recovery, payments to MSMEs, and others.
- New Clause 36B introduced, Clauses 28 and 29 omitted.
- Notifications dated 5th March 2024 and 28th March 2025 form the legal basis.
- Clarifications on Turnover Computation:
The Note provides detailed methodology for computing turnover in various sectors — including speculative transactions, derivatives, and delivery-based trades — particularly for share brokers and agents. - Professional Responsibilities Reaffirmed:
It reiterates the importance of maintaining audit working papers and adhering strictly to Standards on Auditing (SAs), emphasizing professional conduct and the consequences of misconduct. - Appendices and Tools:
Over 20 appendices including sample engagement letters, audit checklists, interpretation of Circulars, and updates on the limits for tax audits, ensuring practical implementation.
Compliance and Penalties
Non-compliance with Section 44AB requirements, including failure to obtain audit reports by the “specified date,” can attract penalties under Section 271B. The revised guidance reiterates the responsibility of auditors to ensure timely and accurate submissions in Form No. 3CA/3CB and Form No. 3CD.
Who Should Read This?
The Guidance Note is indispensable for:
- Practicing Chartered Accountants
- CFOs and internal auditors of companies
- Business owners and professionals approaching audit thresholds
- Tax consultants and legal advisors
ICAI’s Continued Role in Policy Advocacy
The ICAI, through its Direct Taxes Committee, has consistently played a proactive role in advising the Central Board of Direct Taxes (CBDT) and providing feedback on legislative proposals, including via pre- and post-budget memoranda.
Access and Pricing
The publication is priced at ₹650 and is available via ICAI’s website (www.icai.org) and its regional offices. Digital copies may also be accessed by members via ICAI’s e-library portal.
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