Forms 3CA, 3CB & 3CD FAQs for AY 2026-27

Summary: For FY 2025-26 relevant to AY 2026-27, tax audit requirements continue to be governed by section 44AB of the Income-tax Act, 1961 read with Rule 6G of the Income-tax Rules, 1962. Form 3CA applies where the assessee is required by or under another law to get the accounts audited, while Form 3CB applies where such another-law audit is not required but tax audit under section 44AB applies. Form 3CD is the prescribed statement of particulars accompanying Form 3CA or Form 3CB. For business, the normal section 44AB turnover threshold is ₹1 crore, increased to ₹10 crore where both cash receipts and cash payments do not exceed 5% of the respective aggregate receipts and payments. For profession, the statutory section 44AB threshold is ₹50 lakh, subject also to the separate presumptive-tax provisions. CBDT Circular No. 07/2026 dated 28 September 2026 has extended the due date for filing audit reports for AY 2026-27 in the specified category linked to Sl. No. 2 of the table below Explanation 2 to section 139(1) from 30 September 2026 to 21 October 2026, and the corresponding ITR due date from 31 October 2026 to 21 November 2026. Taxpayers and auditors should also carefully apply the revised Form 3CD reporting requirements introduced by CBDT Notification No. 23/2025, particularly for MSME payments, section 43B, loans and deposits, settlement expenditure and share buybacks.

Forms 3CA, 3CB & 3CD FAQs for AY 2026-27

Tax audit for FY 2025-26 is not merely a year-end certification exercise. Form 3CD requires detailed reporting and reconciliation across the books of account, income-tax computation, GST records, TDS/TCS statements, fixed-asset records, MSME vendor data, loans and deposits, statutory liabilities and several other tax-sensitive areas.

For AY 2026-27, particular attention is required because the Form 3CD amendments introduced by CBDT Notification No. 23/2025 continue to apply, while CBDT has separately extended the specified audit-report and return-filing deadlines for the relevant audit category.

Statutory Framework for Tax Audit for AY 2026-27

The starting point is section 44AB tax audit.

Section 44AB specifies the circumstances in which a person carrying on business or profession must get the accounts audited by an accountant and furnish the prescribed audit report.

Rule 6G prescribes the forms in which the audit report and prescribed particulars must be furnished.

Under Rule 6G:

• Form 3CA applies where the person carrying on business or profession is required by or under another law to get the accounts audited.
• Form 3CB applies to a person carrying on business or profession who is not covered by the above category.
• Form 3CD contains the particulars required to be furnished under section 44AB and accompanies the applicable Form 3CA or Form 3CB.

Thus, Form 3CA and Form 3CB are alternative audit-report forms; Form 3CD is the detailed statement of prescribed particulars accompanying the applicable report.

Who Is Required to Get Tax Audit Under Section 44AB?

Applicability should be determined before selecting Form 3CA or Form 3CB.

Business: Basic ₹1 Crore Threshold

Under section 44AB(a), a person carrying on business is ordinarily required to get the accounts audited where total sales, turnover or gross receipts from business exceed ₹1 crore during the previous year.

Business: Enhanced ₹10 Crore Threshold for Low-Cash Businesses

The ₹1 crore threshold is increased to ₹10 crore where both of the following conditions are satisfied:

• aggregate amounts received in cash during the previous year do not exceed 5% of aggregate receipts; and
• aggregate payments made in cash during the previous year do not exceed 5% of aggregate payments.

For this purpose, receipt or payment through a cheque or bank draft which is not account-payee is treated as cash.

Accordingly, businesses near the ₹10 crore threshold should not determine tax-audit applicability merely from turnover. The cash-receipt and cash-payment tests must also be independently verified.

Profession: ₹50 Lakh Threshold

Under section 44AB(b), a person carrying on profession is ordinarily required to obtain tax audit where gross receipts from profession exceed ₹50 lakh during the previous year.

The interaction with section 44ADA should, however, be examined separately for eligible resident professionals.

Interaction With Presumptive Taxation

Tax-audit applicability should not be determined from section 44AB(a) or 44AB(b) in isolation where sections 44AD, 44ADA, 44AE, 44BB or 44BBB are relevant.

Section 44AD

For an eligible assessee carrying on an eligible business, the turnover ceiling for the section 44AD presumptive scheme is ordinarily ₹2 crore.

The ceiling increases to ₹3 crore where cash receipts do not exceed 5% of total turnover or gross receipts.

A person declaring profits and gains in accordance with section 44AD(1) is excluded from section 44AB by the relevant proviso to section 44AB.

The lock-out consequences under section 44AD(4) and corresponding audit requirement under section 44AB(e), where applicable, should also be checked.

Section 44ADA

Section 44ADA applies to specified eligible professions and eligible resident assessees subject to its statutory conditions.

Its normal gross-receipt ceiling is ₹50 lakh, which increases to ₹75 lakh where cash receipts do not exceed 5% of total gross receipts.

Where an eligible assessee validly declares presumptive professional income in accordance with section 44ADA(1), section 44AB does not apply merely because of section 44AB.

However, where the assessee claims profits lower than the presumptive amount and the conditions of section 44ADA(4) are satisfied, audit may become mandatory.

Other Presumptive Provisions

Section 44AB also contains specific provisions relating to persons covered by sections 44AE, 44BB and 44BBB who claim income below the prescribed presumptive amount.

Therefore, tax-audit applicability should be determined by identifying the precise clause of section 44AB rather than merely applying the ₹1 crore or ₹10 crore turnover limits.

Form 3CA vs Form 3CB

When Is Form 3CA Applicable?

Form 3CA applies where the assessee carrying on business or profession is required by or under another law to get the accounts audited.

A common example is a company whose financial statements are subject to statutory audit under the Companies Act, 2013.

Section 44AB itself recognises such cases and provides that where accounts are required to be audited under another law, sufficient compliance involves obtaining that audit within the prescribed framework and furnishing the further report prescribed for section 44AB purposes.

Form 3CA therefore refers to the audit conducted under the other law and is accompanied by Form 3CD.

When Is Form 3CB Applicable?

Form 3CB applies where tax audit under section 44AB is required but the assessee is not required by or under another law to get the accounts audited.

Examples may include proprietorships and partnership firms where section 44AB applies but no separate statutory audit requirement exists under another law.

See Tax Audit under Section 44AB.

What Is Form 3CD?

Form 3CD is the prescribed statement of particulars under Rule 6G(2).

It accompanies Form 3CA or Form 3CB and contains detailed tax-related disclosures concerning the assessee’s business or profession.

The reporting extends, among other matters, to:

• nature of business or profession;
• books of account maintained and examined;
• presumptive income;
• method of accounting;
• valuation of closing stock;
• amounts not credited to the profit and loss account;
• depreciation;
• specified deductions;
• inadmissible expenditure;
• MSME payments;
• payments to specified persons;
• section 43B liabilities;
• loans, deposits and specified advances;
• TDS and TCS compliance;
• quantitative information;
• tax demands and refunds;
• specified financial transaction reporting;
• country-by-country reporting; and
• GST-wise expenditure break-up.

For a broad clause-level reference, see Tax Audit under Section 44AB – Form 3CD Clauses.

Major Form 3CD Changes Relevant for AY 2026-27

CBDT Notification No. 23/2025 dated 28 March 2025, effective from 1 April 2025, amended several important clauses of Form 3CD.

See CBDT Amends Form 3CD and Tax Audit for FY 2025-26: Guide to Form 3CD Changes.

Clause 12: Section 44BBC Added

Section 44BBC was added to the list of presumptive-tax provisions appearing in Clause 12.

The auditor should therefore check whether income is being offered under the relevant presumptive provisions and ensure consistency between Form 3CD and the income-tax return.

Clause 19: Obsolete Deduction References Removed

References to sections 32AC, 32AD, 35AC and 35CCB were removed from Clause 19.

Clause 21: Settlement Expenditure

Clause 21(a) was expanded to include expenditure incurred to settle proceedings initiated in relation to contravention under such law as may be notified by the Central Government.

Accordingly, settlement payments and similar expenditure should be separately reviewed rather than automatically treated according to their accounting classification.

Clause 22: Expanded MSME Reporting

Clause 22 now requires substantially more detailed MSME reporting.

The reporting includes:

• interest inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006;
• total amount required to be paid to micro or small enterprises referred to in section 15 of the MSMED Act during the previous year;
• the amount paid within the time permitted under section 15; and
• the amount not paid within that time and inadmissible for the previous year.

This makes correct identification of micro and small enterprises, payment terms, invoice dates, acceptance/deemed acceptance dates where relevant, and actual payment dates critical to tax audit.

The MSME reconciliation should also be aligned with section 43B(h).

Clause 26: Section 43B Reporting

Notification No. 23/2025 also amended Clause 26 dealing with section 43B.

Taxpayers should reconcile statutory liabilities and other amounts falling within section 43B with payment dates and the deductions claimed in the tax computation.

Particular attention should be given to section 43B(h), which operates differently from several other section 43B liabilities because the ordinary return-filing-date relaxation under the section does not apply to clause (h).

Clauses 28 and 29 Omitted

Clauses 28 and 29 were omitted from Form 3CD by Notification No. 23/2025.

Auditors should therefore use the current Form 3CD schema rather than carrying forward prior-year working papers mechanically.

Clause 31: Loans, Deposits and Specified Advances

Clause 31 was amended to introduce more structured reporting of the nature of relevant transactions.

The prescribed coding covers, among other modes:

• cash payments and receipts;
• non-account-payee cheque payments and receipts;
• transfer of assets;
• transfer of liabilities;
• conversion of assets or liabilities;
• debit and credit journal entries; and
• other modes of debit or credit.

Consequently, merely searching the cash book for section 269SS and section 269T issues is inadequate. Journal entries, asset/liability transfers and other non-cash modes may also require examination and reporting.

New Clause 36B: Buyback of Shares

Clause 36B requires reporting where the assessee has received an amount on buyback of shares referred to in section 2(22)(f).

Where applicable, Form 3CD requires disclosure of:

• the amount received; and
• the cost of acquisition of the shares bought back.

Revised Due Date for AY 2026-27

CBDT Circular No. 07/2026 dated 28 September 2026 has extended the relevant AY 2026-27 deadlines.

For persons falling within the specified category at Sl. No. 2 of the table below Explanation 2 to section 139(1):

Compliance	Earlier Due Date	Extended Due Date
Relevant audit report	30 September 2026	21 October 2026
Corresponding return of income	31 October 2026	21 November 2026

The extension of the audit-report date follows because the “specified date” under section 44AB is linked to the return-filing due date.

Who Falls Under the Relevant Section 139(1) Category?

Sl. No. 2 of the table below Explanation 2 to section 139(1) broadly covers, subject to the statutory wording:

• a company;
• a person other than a company whose accounts are required to be audited under the Income-tax Act or any other law; and
• specified partners of firms whose accounts are required to be audited, including the relevant spouse where section 5A applies.

The Circular should therefore be applied by reference to the statutory category rather than by assuming that every income-tax form due around the same period has automatically been extended.

Transfer-Pricing Cases Require Separate Attention

Cases requiring a report under section 92E fall under a separate return-filing category and have a different statutory timetable.

Accordingly, the 21 October/21 November extension should not automatically be applied to section 92E cases or other special reports without checking the governing provision and any specific extension applicable to them.

Important Form 3CD Reporting Areas for FY 2025-26

Turnover and Gross Receipts

Turnover or gross receipts should be reconciled between:

• audited financial statements;
• books of account;
• GST returns;
• bank receipts where relevant;
• AIS/Form 26AS information where relevant; and
• the figures proposed to be reported in the income-tax return.

Differences should be identified and documented rather than left for reconciliation after filing.

Clause 22 and MSME Dues

MSME reporting has become one of the most important areas of Form 3CD.

The auditor should consider obtaining a vendor-wise reconciliation containing:

• vendor name;
• MSME/Udyam status;
• whether the supplier qualifies as a micro or small enterprise for the relevant purpose;
• invoice amount;
• date of acceptance/deemed acceptance where relevant;
• agreed payment period;
• statutory payment deadline;
• actual payment date;
• amount paid within the permissible period;
• amount paid late or remaining unpaid; and
• corresponding section 43B(h) treatment.

A year-end creditors list alone may not be sufficient for accurate Clause 22 reporting.

Clause 26 and Section 43B

Amounts falling under section 43B should be reconciled between the books, statutory records, subsequent payments and tax computation.

The auditor should distinguish liabilities for which payment up to the applicable return-filing date may preserve deduction from section 43B(h) liabilities, for which the statutory treatment is different.

Clause 31: Sections 269SS and 269T

Loans, deposits, specified sums and specified advances should be reviewed transaction-by-transaction.

The expanded coding introduced by Notification No. 23/2025 makes it particularly important to review:

• cash transactions;
• non-account-payee instruments;
• journal entries;
• asset transfers;
• liability transfers;
• conversion transactions; and
• other non-standard settlements.

Ledger nomenclature alone may not reveal every reportable transaction.

Clause 34: TDS/TCS

Clause 34 requires detailed reporting concerning deduction and collection of tax at source.

Before signing Form 3CD, reconcile:

• expense ledgers;
• TDS/TCS applicability;
• amount on which tax was required to be deducted or collected;
• actual deduction/collection;
• challans;
• TDS/TCS statements;
• late deductions or payments;
• interest under section 201(1A) or section 206C(7), where applicable; and
• tax computation consequences, including relevant disallowances.

Clause 44: GST-wise Expenditure

Clause 44 requires reporting of total expenditure with a break-up relating to entities registered and not registered under GST.

The Income Tax Department’s current tax-audit guidance continues to identify Clause 44 as requiring total expenditure to be divided between expenditure relating to GST-registered entities and entities not registered under GST.

See Understanding Clause 44 of Form 3CD.

The reconciliation should ideally be performed from the general ledger/vendor master rather than being reconstructed immediately before signing the audit report.

Can a Tax Audit Report Be Revised?

Yes, but revision is not unrestricted.

Rule 6G(3) specifically permits revision where, after furnishing the report, a payment is made by the assessee which necessitates recalculation of a disallowance under section 40 or section 43B.

In such a case, the assessee may obtain a revised audit report from the accountant and furnish it before the end of the relevant assessment year.

This provision is particularly relevant where subsequent payment affects a deduction or disallowance already reported.

Penalty for Failure to Obtain or Furnish Tax Audit Report

Failure to comply with section 44AB can attract penalty under section 271B.

The penalty is:

0.5% of total sales, turnover or gross receipts, subject to a maximum of ₹1,50,000.

However, section 273B provides protection where the assessee proves that there was reasonable cause for the failure.

Accordingly, penalty under section 271B is not necessarily automatic merely because the report was delayed, but reasonable cause must be established on the facts and supported by appropriate evidence.

Filing Workflow for Form 3CA/3CB and Form 3CD

The broad e-filing process involves the taxpayer and the Chartered Accountant.

Typically:

1. The taxpayer logs into the Income Tax e-Filing portal.
2. The applicable Chartered Accountant is assigned for the relevant form and assessment year.
3. The CA prepares the applicable Form 3CA-3CD or Form 3CB-3CD using the prescribed process and current utility/schema.
4. The CA verifies and uploads the report using the applicable authentication mechanism, including DSC where prescribed.
5. The uploaded report becomes available to the taxpayer.
6. The taxpayer reviews and accepts the report on the portal.
7. The final accepted report and acknowledgement should be retained with the audit documentation.

The Income Tax Department’s Form 3CB-3CD guidance states that the taxpayer and CA should be registered on the e-Filing portal, the CA should have been assigned by the taxpayer and the relevant DSC requirements should be satisfied.

See Submission of Form 3CA-3CD and 3CB-3CD.

Practical Pre-Signing Checklist for AY 2026-27

• Confirm whether section 44AB applies.
• Identify the precise clause of section 44AB under which audit is required.
• Verify turnover/gross receipts rather than relying only on the financial-statement figure.
• Where relying on the ₹10 crore business threshold, independently test both the 5% cash-receipt and 5% cash-payment conditions.
• Examine applicability of sections 44AD, 44ADA, 44AE, 44BB and 44BBB wherever relevant.
• Confirm whether Form 3CA or Form 3CB is applicable.
• Use the current Form 3CD utility/schema applicable to AY 2026-27.
• Reconcile turnover with financial statements, books and GST records.
• Reconcile income and receipts with AIS/Form 26AS wherever relevant.
• Review accounting-policy and ICDS-related reporting.
• Reconcile depreciation with the fixed-asset register and tax computation.
• Review inadmissible expenditure and section 40/40A adjustments.
• Complete vendor-wise MSME identification and Clause 22 reconciliation.
• Reconcile section 43B liabilities with actual payment dates.
• Review related-party payments and section 40A(2)(b) reporting.
• Review loans, deposits, specified sums and repayments under Clause 31.
• Examine journal entries and non-cash settlements relevant to sections 269SS and 269T.
• Reconcile TDS/TCS books, challans and statements for Clause 34.
• Review quantitative information wherever applicable.
• Complete Clause 44 GST expenditure mapping.
• Check reportable demands/refunds and other tax proceedings.
• Check SFT/Form 61/61A/61B reporting where applicable.
• Review buyback transactions for Clause 36B.
• Cross-check Form 3CD adjustments with the final income-tax computation.
• Ensure Form 3CD and the proposed ITR do not contain unexplained inconsistencies.
• Document management representations and audit qualifications wherever appropriate.
• Ensure the taxpayer accepts the uploaded report on the portal.
• Retain the final filed version and acknowledgement in the audit file.

FAQs on Forms 3CA, 3CB and 3CD for AY 2026-27

1. What is the tax audit turnover limit for business for FY 2025-26?

The normal threshold under section 44AB(a) is ₹1 crore. It increases to ₹10 crore where both cash receipts and cash payments do not exceed 5% of the respective aggregate receipts and payments and the statutory conditions are satisfied.

2. Is the ₹10 crore threshold available merely because cash sales are below 5%?

No. Both tests must be satisfied: cash receipts must not exceed 5% of aggregate receipts and cash payments must not exceed 5% of aggregate payments.

3. Are non-account-payee cheques treated as non-cash transactions for the ₹10 crore test?

No. Section 44AB specifically deems receipts or payments through non-account-payee cheques or bank drafts to be cash for this purpose.

4. What is the section 44AB threshold for profession?

The general gross-receipt threshold under section 44AB(b) is ₹50 lakh. The interaction with section 44ADA should separately be examined for eligible professionals.

5. What is the section 44AD turnover ceiling for FY 2025-26?

The normal ceiling is ₹2 crore. It increases to ₹3 crore where cash receipts do not exceed 5% of total turnover or gross receipts and the other statutory conditions are satisfied.

6. What is the section 44ADA gross-receipt ceiling?

The normal ceiling is ₹50 lakh. It increases to ₹75 lakh where cash receipts do not exceed 5% of gross receipts and the statutory conditions are satisfied.

7. Is Form 3CA used by every company?

The statutory test is whether the accounts are required by or under another law to be audited. Companies ordinarily have a statutory audit requirement under company law, but the correct form should always be determined from the applicable facts and law rather than entity status alone.

8. When is Form 3CB used?

Form 3CB applies where section 44AB audit is required but the assessee is not a person whose accounts are required by or under another law to be audited.

9. Is Form 3CD itself the tax audit report?

Form 3CD is the prescribed statement of particulars under Rule 6G(2). It accompanies the applicable audit report in Form 3CA or Form 3CB.

10. Can Form 3CD be filed without Form 3CA or Form 3CB?

For a section 44AB tax audit, Form 3CD accompanies the applicable Form 3CA or Form 3CB.

11. What is the revised tax-audit due date for the covered AY 2026-27 category?

The relevant audit-report deadline has been extended from 30 September 2026 to 21 October 2026 by CBDT Circular No. 07/2026 dated 28 September 2026.

12. What is the corresponding ITR due date?

For the specified category covered by the Circular, the return-filing deadline has been extended from 31 October 2026 to 21 November 2026.

13. Does 21 October 2026 apply to every audit report under the Income-tax Act?

No. The Circular specifically applies to the category linked to Sl. No. 2 of the table below Explanation 2 to section 139(1). Other reports and special categories must be examined under their respective provisions.

14. Does the same deadline automatically apply to transfer-pricing cases?

No. Cases requiring a report under section 92E fall within a separate statutory category and their applicable deadlines must be checked independently.

15. Why is Clause 22 particularly important for AY 2026-27?

The revised Clause 22 requires detailed reporting relating to amounts payable to micro and small enterprises and payments within or beyond the time prescribed under section 15 of the MSMED Act. These details can directly affect deductibility under section 43B(h).

16. Does section 43B(h) apply to every MSME supplier?

No. The provision refers specifically to amounts payable to a micro or small enterprise beyond the time specified in section 15 of the MSMED Act. Supplier classification therefore requires careful verification.

17. Can payment made after year-end cure a section 43B(h) disallowance for that year?

Section 43B(h) requires separate treatment from the other specified section 43B liabilities. The ordinary return-due-date relaxation does not extend to clause (h); deductibility must therefore be examined by reference to the statutory MSMED payment timeline and actual payment.

18. Why has Clause 31 become more important?

The revised Clause 31 contains transaction-mode codes covering cash, non-account-payee instruments, asset/liability transfers, conversions, journal entries and other modes. Review should therefore extend beyond obvious cash loans and repayments.

19. What needs to be reconciled for Clause 34?

The books of account, TDS/TCS applicability, amounts subject to withholding, deductions/collections, challans, statements and applicable interest should be reconciled before Form 3CD is finalised.

20. Is Clause 44 still applicable?

Yes. Clause 44 requires reporting of expenditure with a break-up relating to entities registered under GST and entities not registered under GST.

21. Can a tax audit report be revised?

Rule 6G(3) expressly permits revision where a subsequent payment necessitates recalculation of disallowance under section 40 or section 43B. Such revised report may be furnished before the end of the relevant assessment year, subject to the conditions of the Rule.

22. What is the penalty for failure to comply with section 44AB?

Section 271B provides for penalty equal to 0.5% of total sales, turnover or gross receipts, subject to a maximum of ₹1,50,000.

23. Is section 271B penalty automatic?

No. Section 273B provides that penalty need not be imposed where the assessee proves reasonable cause for the failure.

24. Should Form 3CD be prepared independently of the income-tax return?

No. Although the audit report is furnished before the return in the ordinary statutory sequence, Form 3CD reporting should be reconciled with the tax computation and proposed return. Differences in turnover, depreciation, section 43B, TDS-related disallowances and other adjustments can create avoidable scrutiny risks.

25. What should the taxpayer check before accepting the tax audit report?

The taxpayer should verify that the correct assessment year and form have been used, important financial and tax particulars are accurate, qualifications have been understood, and the version appearing for acceptance is the intended final report uploaded by the auditor.

Key Takeaways

• Tax audit for FY 2025-26/AY 2026-27 continues to be governed by section 44AB read with Rule 6G.
• The ordinary business tax-audit threshold is ₹1 crore, increased to ₹10 crore where both statutory 5% cash tests are satisfied.
• The general professional threshold under section 44AB is ₹50 lakh.
• Section 44AD has a ₹2 crore presumptive ceiling, increased to ₹3 crore where the specified cash-receipt condition is satisfied.
• Section 44ADA has a ₹50 lakh ceiling, increased to ₹75 lakh where the specified cash-receipt condition is satisfied.
• Form 3CA applies where accounts are required to be audited under another law; Form 3CB applies to other section 44AB audit cases.
• Form 3CD is the detailed statement of prescribed particulars accompanying Form 3CA or Form 3CB.
• CBDT Circular No. 07/2026 extends the covered audit-report deadline to 21 October 2026 and the corresponding ITR deadline to 21 November 2026.
• The extension should not be treated as a blanket extension for every audit report, certificate or transfer-pricing case.
• Notification No. 23/2025 materially changed Form 3CD reporting, particularly Clauses 12, 19, 21, 22, 26 and 31, omitted Clauses 28 and 29 and introduced Clause 36B.
• MSME reporting under Clause 22 and section 43B(h) requires vendor-level and invoice/payment-level reconciliation.
• Clause 31 now requires closer review of journal entries and other non-cash loan/deposit transactions.
• TDS/TCS, GST expenditure, depreciation, statutory liabilities and tax computation should be fully reconciled before signing Form 3CD.
• Failure to comply with section 44AB can attract section 271B penalty of 0.5% of turnover/gross receipts, capped at ₹1.50 lakh, subject to reasonable-cause protection under section 273B.

Disclaimer: This article is intended for general informational purposes. Tax-audit applicability and reporting requirements depend upon the facts of each assessee, the applicable provisions of the Income-tax Act, 1961, Income-tax Rules, 1962, notifications, circulars and the utility/schema applicable at the time of filing. Taxpayers and professionals should verify the latest statutory provisions and e-Filing portal requirements before filing.