Last reviewed: 4 September 2026
Quick answer: We handle four categories of audit — Statutory Audit (every registered company, regardless of turnover), Tax Audit under the Income Tax Act (once turnover or receipts cross a prescribed limit), GST Audit and reconciliation, and special-purpose audits carried out at a client’s specific request (investigation, stock, trust, and RERA project audits). Each has its own trigger and timeline, covered below.
“Audit” covers several distinct engagements with different legal triggers — a company doesn’t choose whether it needs a statutory audit, but it may or may not cross the threshold for a tax audit in a given year. Here’s the factual position on each.
Statutory Audit
Every company registered under the Companies Act, 2013 requires a statutory audit each financial year, independent of turnover, profit, or size. It’s a legal requirement tied to company registration itself, not a threshold-based one. The statutory auditor examines the company’s financial statements and reports to shareholders on whether they present a true and fair view, in the form prescribed under the Companies Act.
- Applies to: every private limited company, public company, and one-person company, from the first financial year onward.
- Auditor appointment: made by the board (first auditor) or shareholders at an AGM, and filed with the Registrar of Companies.
- Output: an audit report annexed to the financial statements filed with the ROC (see our Secretarial Compliance page for the AOC-4/MGT-7 filing deadlines that follow).
Tax Audit (under the Income Tax Act)
A tax audit is separate from a statutory audit and is triggered by turnover or gross receipts crossing a prescribed limit under Section 63 of the Income Tax Act, 2025 (Section 44AB of the Income-tax Act, 1961), not by company registration. It applies to individuals, partnerships, and companies alike, once the threshold is crossed.
| Category | Tax audit required once… |
|---|---|
| Business | Total sales, turnover, or gross receipts exceed ₹1 crore in the financial year |
| Business — cash transactions ≤ 5% | The ₹1 crore limit is raised to ₹10 crore, where cash receipts and cash payments each stay within 5% of the total |
| Profession | Gross receipts exceed ₹50 lakh in the financial year |
A late or missed tax audit carries a penalty under Section 446 of the Income Tax Act, 2025 (Section 271B of the Income-tax Act, 1961) — the lesser of 0.5% of turnover/gross receipts or ₹1.5 lakh. The tax audit report and return are governed by the Income Tax Act — see our Income Tax Act 2025 vs 1961 page for how the transition to the new Act affects filings from 1 April 2026.
GST Audit & Reconciliation
GST audit work centres on reconciling what’s been filed against what the GST portal actually reflects — input tax credit claimed, outward supplies reported, and any mismatch that could otherwise surface as a notice later. See our GST Services page for registration thresholds and return-filing details; this audit work is the ongoing check that sits alongside regular GST compliance.
At the request of client — special-purpose audits
Beyond the three audits above, we carry out audits commissioned directly by a client rather than triggered by a statutory threshold:
- Investigation audits — a focused review of a specific concern (a suspected discrepancy, a pre-acquisition check, a partner or director dispute).
- Stock audits — physical verification and valuation of inventory, often requested by a lender as a condition of working-capital finance.
- Trust audits — audits of charitable and religious trusts, required for maintaining tax-exempt status and for filing under the applicable trust/society law.
- RERA project audits — verification of project-account utilisation for registered real-estate projects; see our RERA Compliance page for registration thresholds.
Questions we’re asked about audits
My company had no turnover this year — do we still need a statutory audit?
Yes. A statutory audit under the Companies Act is tied to company registration, not turnover — even a dormant or zero-turnover company requires one each financial year.
I’m a freelancer with ₹45 lakh in receipts — do I need a tax audit?
Not on receipts alone — the professional threshold is ₹50 lakh in gross receipts. It’s worth tracking through the year, though, since crossing the limit even briefly during the year is what triggers the requirement, not a year-end estimate.
Can a stock audit or investigation audit be requested outside of a lender or dispute situation?
Yes — these are commissioned directly by the client for their own purposes (due diligence before a transaction, an internal control check, or simply periodic verification) and don’t require an external trigger like a lender’s condition.
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