Section 44AB is Gone — How Different is Tax Audit Under the New Act?

From threshold limits to Form 3CD equivalent clauses, what are the key differences you have spotted between tax audit under the old and new IT Act? Has the compliance burden reduced for practitioners and auditees, or is it largely the same with a new coat of paint? 

Replies (4)
Quick Summary
Discussion on tax audit changes under the new Act vs Section 44AB. Higher thresholds reduce audit cases, but remaining audits need deeper analysis (digital trails, GST linkage). Shift from volume to value; compliance largely similar but more technical focus.

The transition marks a shift from "Volume" to "Value." While many smaller clients will no longer require audits due to higher thresholds (₹15Cr digital/₹75L professional), the audits that remain will demand higher technical proficiency in digital forensics and GST-income tax cross-linking. It’s less of a "new coat of paint" and more of an "engine overhaul" under the same chassis.

 

Look at change

From penalty to fees

Penalty can be waived but fees cannot

Section 44AB is not abolished for AY 2026-27 ,  just renumbered under the new Act.

For the current filing season (FY 2025-26, AY 2026-27), everything is unchanged:
- Audit threshold: Rs 1 crore for business (Rs 10 crore if cash receipts + payments are each below 5% of totals)
- Professional gross receipts threshold: Rs 50 lakh
- Forms: 3CA, 3CB, and 3CD continue to apply
- Due date: September 30, 2026 for the audit report; October 31 for the ITR

What the Income Tax Act, 2025 actually does:
Section 63 of the new Act is the successor to Section 44AB, and a new Form 26 will replace 3CA/3CB/3CD. But this new form comes into force from Tax Year 2026-27 (financial year starting April 2026) ,  not AY 2026-27. So for the audits you are completing right now, the old sections and forms are still what the portal and the department expect.

One thing worth double-checking before you file 3CD: the threshold computation. The 95% digital receipts test for the Rs 10 crore exemption counts ALL cash inflows ,  including loans received, advances, and refunds ,  not just turnover. A few clients have found they breached the 5% cap when they computed only on sales.

For a breakdown of how the new Act restructures audit thresholds, the Tax Garden guide on [tax audit Section 44AB thresholds](https://taxgarden.in/pricing) has a clear comparison of old vs new numbering.

Transitioning to the new mechanism requires businesses to clearly understand threshold criteria, the scope of audits, and reporting obligations to avoid errors during the filing process. This topic is particularly useful for those seeking a deeper understanding of changes to tax audits and the impact of the new regulations on small and medium-sized enterprises.wacky flip

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