The changes in Tax Audit for FY 2026-27 (relevant to AY 2027-28 / transition from AY 2026-27)

Tax Audit:

In layman terms Tax Audit is examination of tax payers’ books of accounts and financial
records by a practising Chartered Accountant. The Chartered Accountant checks that the
accounts are accurate, true and comply with the Income Tax Act.

Tax Audit is triggered when

 In case of Business when total sales, turnover or gross receipts exceeds ₹ 1 crore.
 For Professionals when gross receipts exceed ₹ 50 lakhs.

Digital Transaction Benefit

In case of business

 Total cash receipts during the year did not exceed 5% of the gross total receipts.
 Total Cash payments during the year did not exceed 5% of the total payments.

The general limit for tax audit for business is increased from ₹ 1 crore to ₹ 10 crore.

Note: There is no corresponding benefit for Professionals.

Presumptive Taxation

This is a simplified Scheme introduced to help small businesses and profession by reporting
income at a fixed percentage of turnover or receipts and avoid detailed book keeping.

Business (Section 44AD)

 The businesses can take advantage of Presumptive taxation if turnover is upto ₹ 3 crores
 Fixed percentage of turnover is 6% for digital receipts and 8% for cash receipts

Profession (Section 44ADA)

 The professional can take advantage of Presumptive taxation if turnover is upto ₹ 50 lakhs
 Profit as fixed percentage of turnover is 50% of gross receipts.

Due Dates

 Tax audit due date (FY 2025-26 / AY 2026-27):

30 September 2026

 Transfer pricing cases:

31 October 2026

Major Structural Change

New Income-tax Act, 2025

 The Income-tax Act, 2025 comes into force from 1 April 2026

 Corresponding provision for tax audit shifts from Section 44AB (old Act) to Section 63(new Act)

New Income Tax Forms

 Existing forms 3CA / 3CB / 3CD continue for AY 2026-27

 Under the new regime (Income-tax Rules, 2026) a single consolidated Form 26 will replace all forms w.e.f. FY 2026-27

Changes in Form 3CD reporting (Continuing into FY 2026-27)

 MSME reporting strengthened (Section 43B(h))

 Buyback of shares disclosure added

 Detailed reporting of loans/deposits & advances

 Legal settlement expenditure reporting

 Enhanced presumptive taxation reporting

Enhanced Reporting Areas (Continuing into FY 2026-27)

Key clauses gaining importance:

 Clause 44 – GST turnover reconciliaƟon

 Cash transacƟon reporƟng (269SS / 269T / 40A(3))

 TDS/TCS compliance & disallowances

 Related party transactions (40A(2)(b))

 Inventory valuation (Section 145A)