Under the Companies Act, 2013, every limited company in India, private or public, must have its accounts audited every year. There is no exemption for low turnover, zero profit, or dormant status. This statutory audit is the baseline compliance obligation for every registered company from its first financial year.
If you searched for an “audit exemption,” India offers none for companies. This guide sets out who needs which audit, the exact thresholds, the forms, the due dates for FY 2024-25 (AY 2025-26), and the penalties, with each figure sourced to its statute.
Which Companies Need a Statutory Audit in India?
Every company needs a statutory audit: 100% of them, with no size, turnover, or dormancy exemption. The legal basis is Section 139 (appointment), Section 143 (auditor’s powers and duties), and Section 129 (financial statements) of the Companies Act, 2013. A practising Chartered Accountant (CA) or CA firm holding a valid Certificate of Practice from the Institute of Chartered Accountants of India (ICAI) must conduct it.
India’s only carve-outs from the Section 129 financial-statement rules are sector-specific (insurance, banking, and electricity companies), not size-based, per the Companies Act, 2013, Section 129. Contrast the UK: a private company there can skip a statutory audit if it meets two of three small-company tests, per GOV.UK audit-exemption guidance.
| Contrast point | India | UK (FYs from 6 April 2025) | Source |
|---|---|---|---|
| Turnover exemption | None | Turnover up to £15 million | GOV.UK audit exemptions |
| Balance sheet exemption | None | Assets up to £7.5 million | GOV.UK audit exemptions |
| Small-company relief | None | 2 of 3 tests, ≤50 employees | GOV.UK audit exemptions |
What Types of Audits Apply to Private Limited Companies?
Four audits can apply: statutory (always), tax, internal, and cost (each threshold-triggered). Only the statutory audit is universal. The others depend on turnover, borrowings, sector, or activity. Each is governed by a different law and, for cost audit, conducted by a different professional.
| Audit type | Legal basis | Trigger | Who conducts | Output / form |
|---|---|---|---|---|
| Statutory | Sections 139, 143, Companies Act, 2013 | Every company, every year | Practising CA | Auditor’s report, filed via AOC-4 |
| Tax | Section 44AB, Income-tax Act, 1961 | Turnover above ₹1 crore (₹10 crore if digital) | Practising CA | Form 3CA + 3CD |
| Internal | Section 138 + Rule 13, Companies (Accounts) Rules, 2014 | Turnover ≥ ₹200 crore or borrowings > ₹100 crore | CA, Cost Accountant, or other professional | Report to the Board |
| Cost | Section 148, Companies Act, 2013 | Sector plus turnover test | Practising Cost Accountant | Form CRA-4 |
When Does a Tax Audit Apply Under Section 44AB?
A tax audit applies to a business with turnover above ₹1 crore, per Section 44AB of the Income-tax Act, 1961. The threshold rises to ₹10 crore where cash receipts and cash payments each stay within 5% of totals, per the Finance Act, 2021. A profession is audited when gross receipts exceed ₹50 lakh.
| Case | Threshold | Source |
|---|---|---|
| Business (default) | Turnover above ₹1 crore | Section 44AB, Income-tax Act, 1961 |
| Business (≥95% digital) | Turnover above ₹10 crore | Finance Act, 2021 (from AY 2021-22) |
| Profession | Gross receipts above ₹50 lakh | Section 44AB, Income-tax Act, 1961 |
| Presumptive (44AD / 44ADA) | Declaring below presumptive rate with income above the basic exemption | Sections 44AD / 44ADA, Income-tax Act, 1961 |
The tax audit report is generally due by 30 September of the assessment year. The Central Board of Direct Taxes (CBDT) issues year-specific extensions, so verify the current FY 2024-25 (AY 2025-26) notification before filing. Companies with international or specified domestic transactions also file Form 3CEB, and the audit feeds directly into the corporate tax computation in India.
Which Tax Audit Form Applies: 3CA, 3CB or 3CD?
A private limited company files Form 3CA plus Form 3CD, never 3CB. Form 3CA applies when accounts are already audited under another law, which every company is, via its statutory audit under the Companies Act, 2013. Form 3CB is only for assessees not audited under any other law, such as proprietorships and most partnerships. Form 3CD is the 44-clause statement of particulars filed alongside 3CA.
When Is an Internal Audit Mandatory (Section 138)?
An internal audit is mandatory for a private company with turnover of ₹200 crore or more in the preceding financial year, or bank/public financial institution (PFI) borrowings exceeding ₹100 crore at any point in the preceding financial year, per Rule 13, Companies (Accounts) Rules, 2014. Below these limits, no internal audit is required.
| Company type | Trigger | Source |
|---|---|---|
| Private company | Turnover ≥ ₹200 crore OR borrowings > ₹100 crore | Rule 13(1)(c), Companies (Accounts) Rules, 2014 |
| Unlisted public company | Paid-up capital ≥ ₹50 crore OR turnover ≥ ₹200 crore OR deposits ≥ ₹25 crore OR borrowings > ₹100 crore | Rule 13(1)(b), Companies (Accounts) Rules, 2014 |
| Listed company | Always mandatory, no threshold | Rule 13(1)(a), Companies (Accounts) Rules, 2014 |
The internal auditor need not be a CA. Section 138(1) of the Companies Act, 2013 allows a Cost Accountant, or any professional the Board decides is qualified, including a company employee, to serve.
When Does Cost Audit Apply Under Section 148?
Cost audit applies through a two-part test under Section 148 of the Companies Act, 2013. Step one: a company in a listed sector must maintain cost records once overall turnover reaches ₹35 crore, per Rule 3 of the Companies (Cost Records and Audit) Rules, 2014. Step two: it needs a cost audit only if it also clears the Rule 4 turnover thresholds below.
| Sector | Overall turnover | Individual product/service turnover | Source |
|---|---|---|---|
| Regulated (Table A: telecom, electricity, petroleum, pharma, fertilisers, sugar) | ≥ ₹50 crore | ≥ ₹25 crore | Rule 4, Companies (Cost Records and Audit) Rules, 2014 |
| Non-regulated (Table B) | ≥ ₹100 crore | ≥ ₹35 crore | Rule 4, Companies (Cost Records and Audit) Rules, 2014 |
A cost audit is exempt where export revenue in foreign exchange exceeds 75% of total revenue, where the unit is in a Special Economic Zone, or where the company is a micro or small enterprise, per the same rules. A practising Cost Accountant, a member of the Institute of Cost Accountants of India (ICMAI), conducts it, not a CA. Forms: CRA-2 (appointment), CRA-3 (report to the Board), and CRA-4 (filed with the Ministry of Corporate Affairs, MCA, within 30 days of receiving the report).
How Is an Auditor Appointed Under the Companies Act 2013?
The Board of Directors appoints the first auditor within 30 days of incorporation, per Section 139(6) of the Companies Act, 2013. If the Board fails, members appoint within 90 days at an extraordinary general meeting (EGM). The first auditor holds office until the first annual general meeting (AGM).
Subsequent auditors are appointed at the AGM for a five-year term, holding office from the first AGM to the conclusion of the sixth AGM, per Section 139(1). Annual ratification was removed by the Companies (Amendment) Act, 2017. The company files Form ADT-1 with the Registrar of Companies (ROC) within 15 days of appointment, on the MCA portal, signed with a Digital Signature Certificate (DSC). Attachments include the auditor’s written consent, the Section 141 eligibility certificate, and the AGM resolution.
Do Auditor Rotation Rules Apply to Your Company?
Mandatory rotation applies only to listed companies and prescribed classes under Section 139(2) of the Companies Act, 2013, not to every company. Among private companies, only those with paid-up share capital of ₹50 crore or more (raised from ₹20 crore on 22 June 2017), or public borrowings/deposits of ₹50 crore or more, are caught, per Rule 5 of the Companies (Audit and Auditors) Rules, 2014.
Where rotation applies, an individual auditor serves one term of five years and an audit firm two terms of five years each, with a five-year cooling-off before reappointment, per Rule 6 of the same rules. The 2017 amendment removed only annual ratification; the rotation framework stayed in force.
Who Can and Cannot Be an Auditor (Section 141)?
Only a practising CA, or a firm where a majority of partners are practising CAs, can be appointed, per Section 141 of the Companies Act, 2013. The section disqualifies a body corporate (other than an LLP of CAs), an officer or employee of the company, and a partner or employee of such a person.
Disqualification also extends to a person (or their relative or partner) holding any security or interest in the company, indebted beyond ₹5 lakh, or giving a guarantee beyond ₹1 lakh for a third party’s debt to the company. A person whose relative is a director or in key management, or who already holds audit appointments in more than 20 companies, is also barred.
Who Signs the Audit Report?
The appointed statutory auditor signs personally, or, for a firm, the engagement partner who is a CA signs. The signed report must carry the CA’s membership number, the Firm Registration Number (FRN), the place, the date, and the ICAI-generated Unique Document Identification Number (UDIN), obtained on the ICAI UDIN portal to curb forged certificates. MCA-portal filings require a Class 3 DSC.
The report states the auditor’s opinion (whether the financials show a true and fair view), the basis for that opinion, Key Audit Matters (KAM) for larger companies, and the respective responsibilities of management and the auditor. Under Section 143(3)(i), the auditor must also report on the adequacy and operating effectiveness of internal financial controls (IFC) for financial years starting on or after 1 April 2015.
Does CARO 2020 Apply to Your Company?
CARO 2020, the Companies (Auditor’s Report) Order, 2020, requires the auditor to report on 21 specified matters, and applies to reports for financial years commencing on or after 1 April 2021. A private company is exempt only if it is not a subsidiary or holding of a public company and stays below all three thresholds: paid-up capital plus reserves of ₹1 crore, total borrowings of ₹1 crore, and total revenue of ₹10 crore.
Which ROC Forms and Due Dates Apply After the Audit?
The AGM must be held within six months of the financial year end, so by 30 September 2025 for FY 2024-25. Audited financials go to the ROC on Form AOC-4, and the annual return on MGT-7 or MGT-7A, within set windows after the AGM.
| Filing | Form | Due date (FY 2024-25 / AY 2025-26) | Source |
|---|---|---|---|
| Hold AGM | — | By 30 September 2025 | Section 96, Companies Act, 2013 |
| Auditor appointment intimation | ADT-1 | 15 days from AGM | Section 139, Companies Act, 2013 |
| Audited financial statements | AOC-4 | 30 days from AGM | Rule 12, Companies (Accounts) Rules, 2014 |
| Annual return | MGT-7 / MGT-7A | 60 days from AGM | Rule 11, Companies (Management and Administration) Rules, 2014 |
| Tax audit report | 3CA + 3CD | 30 September of AY (verify CBDT extension) | Income-tax Act, 1961 |
| Income tax return | ITR-6 | 31 October of AY (verify CBDT extension) | Income-tax Act, 1961 |
| Cost audit report | CRA-4 | 30 days from receipt of report | Rule 6(6), Companies (Cost Records and Audit) Rules, 2014 |
MGT-7A applies to small companies (Section 2(85)) and One Person Companies (OPCs) under the 2021 amendment to Rule 11. Because these dates shift with government extensions, cross-check the India compliance calendar for the current year.
Do Dormant Companies Need a Statutory Audit?
Yes. A dormant, non-operating, or zero-revenue company must still prepare audited financial statements and file its annual return. India has no dormant-company audit exemption. A company obtains dormant status under Section 455 of the Companies Act, 2013 by filing Form MSC-1, and must confirm that status yearly through the return in Form MSC-3, which relies on audited accounts.
What Are the Penalties for Audit Non-Compliance?
Non-compliance triggers fines under multiple statutes, keyed to the specific default. Section 147 of the Companies Act, 2013 covers audit-provision and auditor-appointment failures; late ROC filings run on per-day additional fees under Sections 137 and 92, not a lump sum.
| Default | Governing provision | Penalty | Source |
|---|---|---|---|
| Failure to comply with audit provisions (Sections 139–146) | Section 147, Companies Act, 2013 | Company fine ₹25,000 to ₹5 lakh; officer in default ₹10,000 to ₹1 lakh (imprisonment up to 1 year possible) | Companies Act, 2013, Section 147 |
| Late filing of AOC-4 | Section 137, Companies Act, 2013 | ₹100 per day, no cap | Companies Act, 2013, Section 137 |
| Late filing of MGT-7 / 7A | Section 92, Companies Act, 2013 | ₹100 per day, no cap | Companies Act, 2013, Section 92 |
| Tax audit not obtained or furnished | Section 271B, Income-tax Act, 1961 | 0.5% of turnover/gross receipts, max ₹1.5 lakh | Income-tax Act, 1961, Section 271B |
| Auditor failing to report fraud | Section 143(15), Companies Act, 2013 | ₹5 lakh (listed company) / ₹1 lakh (other) | Companies (Amendment) Act, 2020 (effective 21 December 2020) |
| Late filing of CRA-4 | Companies (Registration Offices and Fees) Rules, 2014 | Additional fee scaling with delay | MCA fee rules |
What Documents Does the Auditor Need?
The auditor needs, ready before fieldwork: the year-end trial balance and general ledger, board resolutions authorising loans and investments, prior-year ROC filings (AOC-4, MGT-7, ADT-1), full-year bank statements, statutory registers, GST and TDS returns, the fixed asset register with depreciation schedules, sales and purchase invoices, and material contracts and agreements. Providing these promptly shortens the audit and reduces qualifications.
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