Tax Audit vs Statutory Audit: Differences, Who Needs Each, and Timelines
Tax audit and statutory audit are often confused but serve entirely different legal purposes. This guide explains who is required to get each, the differences, and key deadlines.
Last updated: 2026-04-25 · CA-reviewed
Tax Audit (Section 44AB)
Mandatory for businesses above turnover threshold — Income Tax Act
- Provides verified income statement accepted by tax authorities
- Reduces scrutiny risk — tax department trusts audited figures
- Form 3CD details help maintain compliance discipline
- Covers all forms of entities — individuals, firms, companies
- Required only for income tax purposes — not for Companies Act compliance
- Does not replace statutory audit for companies
- Separate report (Form 3CD/3CB) from statutory audit
Any business (individual, firm, LLP, company) with turnover above ₹1 crore (₹10 crore if mostly digital transactions); professionals above ₹50L gross receipts.
Statutory Audit (Companies Act)
Mandatory for ALL companies — Companies Act 2013
- Provides credibility to financial statements for all stakeholders
- Required for ROC filings, bank loans, and investor relations
- Mandatory regardless of turnover or profit
- Auditor reports on internal controls, compliance with Companies Act
- Only applicable to companies — not individuals, firms, or LLPs
- Audit can take longer due to extensive procedures
- Cannot be by a related-party CA firm
All Private Limited and Public Limited companies — mandatory every year regardless of size, revenue, or profit.
Tax Audit (Section 44AB) vs Statutory Audit (Companies Act): Feature Comparison
| Parameter | Tax Audit (Section 44AB) | Statutory Audit (Companies Act) |
|---|---|---|
| Governing law | Income Tax Act, 1961 | Companies Act, 2013 |
| Who must get it | Businesses > ₹1Cr turnover; professionals > ₹50L | All companies (Pvt Ltd, Public Ltd) — no turnover threshold |
| Applies to | Individuals, firms, LLPs, companies | Companies only (not individuals/LLPs) |
| Report form | Form 3CA/3CB + Form 3CD | Auditor's Report under Sec 143(3) |
| Due date | September 30 (October 31 with transfer pricing) | Before AGM (typically September 30) |
| Penalty for non-compliance | ₹1.5 lakh penalty; disallowance of deductions | Director prosecution, ROC action, fines |
| Purpose | Verify income, disallowances, and TDS compliance for Income Tax | True and fair view of financials for shareholders, ROC |
| Overlapping? | A company may need BOTH | A company may need BOTH |
Expert Verdict: Which Should You Choose?
Many companies need BOTH audits — statutory audit is mandatory for all companies under Companies Act, and if turnover exceeds ₹1 crore, a separate tax audit under Section 44AB is also required. LLPs need only tax audit (when applicable), not statutory audit. Individual businesses and proprietorships need only tax audit. The two audits can be done by the same CA but must result in separate reports.
Frequently Asked Questions
Yes. The same CA firm can conduct both the statutory audit (under Companies Act) and the income tax audit (Section 44AB) for a company. The auditor prepares: (1) Auditor's Report under Section 143(3) for statutory audit, and (2) Form 3CA (if statutory audit already done) + Form 3CD for tax audit. Using the same CA simplifies the process since they already have detailed knowledge of the accounts.
A new company with zero revenue does not require a tax audit under Section 44AB (since the turnover threshold is not crossed). However, it DOES require a statutory audit under the Companies Act — this is mandatory for ALL companies regardless of revenue. Even a company with zero transactions must appoint an auditor within 30 days, maintain books, and get an audit done.