The objectives of a tax audit are:

• To ensure proper maintenance of books of accounts and records.
• To verify the correctness of financial data reported in the tax returns.
• To facilitate the efficient administration of tax laws by providing standardized information in prescribed forms.
• To detect and prevent tax evasion and malpractices.

These forms are prescribed for reporting the results of a tax audit under Section 44AB:

• Form 3CA: Used when the taxpayer is required to get their accounts audited under any other law (e.g., the Companies Act).
• Form 3CB: Used when the taxpayer is not required to get their accounts audited under any other law.
• Form 3CD: A detailed statement of particulars regarding the taxpayer's financial and tax-related details. It is submitted along with either Form 3CA or Form 3CB.

If a taxpayer fails to get their accounts audited as required under Section 44AB, a penalty under Section 271B may be imposed. The penalty is the lower of the following:

• 1. 0.5% of total sales, turnover, or gross receipts.
• 2. ₹1,50,000.

However, no penalty is levied if the taxpayer can demonstrate a reasonable cause for the failure (e.g., natural disasters, illness, etc.).

The following individuals and entities are required to undergo a tax audit:

• Businesses: If total sales, turnover, or gross receipts exceed ₹1 crore (₹10 crore if at least 95% of receipts and payments are digital).
• Professionals: If gross receipts exceed ₹50 lakh.
• Presumptive taxpayers:
  • Business taxpayers opting for presumptive taxation under Section 44AD must get a tax audit if their declared income is less than 6% (digital) or 8% (cash) of turnover and their total income exceeds the basic exemption limit.
  • Professionals opting for presumptive taxation under Section 44ADA must get a tax audit if their declared income is less than 50% of gross receipts and their total income exceeds the basic exemption limit.

Taxpayers not meeting the criteria under Section 44AB are exempt. Examples include:

• Businesses with turnover below ₹1 crore (₹10 crore if at least 95% of transactions are digital).
• Professionals with gross receipts below ₹50 lakh.
• Taxpayers opting for presumptive taxation under Section 44AD or 44ADA who meet all conditions and declare income as per the presumptive scheme.

As per the ICAI guidelines:

• A CA can sign up to 60 tax audit reports in a financial year.
• This limit includes all audits conducted under Section 44AB of the Income Tax Act.

This cap ensures quality and due diligence in the auditing process.