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Third Proviso to 44AB

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raghav khanna

25 Points Posted on 24 August 2021

There is clause in 3cd in which we have to select relevant clause under which audit has been conducted. In form 3CD there is an option of selecting third proviso to sec 44ab. If turnover of company doesn't exceed Rs.1CR, whether 3cd is reqd to be issued selecting clause of third proviso?

Replies (3)

Quick Summary

This discussion clarifies the applicability of the third proviso to Section 44AB regarding tax audits. It explains that if a company's turnover does not exceed Rs. 1 crore, a tax audit under Section 44AB is generally not required, unless specific conditions are met. The presumptive taxation scheme under Section 44AD is also mentioned as a factor influencing audit requirements.

CA. Sourav Sarkar

Chartered Accountant

16188 Points Posted on 24 August 2021

If turnover is less than 1 crores rupees then tax audit is not applicable

Mitali

Finance Professional

45545 Points Posted on 16 October 2023

A person carrying on business, if his total sales, turnover or gross receipts (as the case may be) in business for the year exceed or exceeds Rs. 1 crore. This provision is not applicable to the person, who opts for presumptive taxation scheme under section 44AD and his total sales or turnover doesn't exceed Rs. 2 crores.

Aashok Kumar Sharma

Finance/Compliance Consultant

71718 Points Posted on 07 November 2026

Third proviso in plain terms:

• Sec 44AB third proviso: tax audit doesn't apply to a person who declares profits under Sec 44AD(1) and whose total turnover doesn't exceed Rs 3 crore (from AY 2024-25, with cash receipts 5% or less; earlier Rs 2 crore). So a 44AD assessee with turnover above Rs 1 crore (or Rs 10 crore) but within the 44AD limit is not audited because of turnover.

• In Form 3CD clause 8 ("relevant clause of 44AB"), the third-proviso option is for reporting cases audited for other reasons.

• Audit can still apply under Sec 44AB(e): if a person is eligible for 44AD, declares income below 6%/8%, has total income above the exemption limit, and had earlier opted out (44AD(4)/(5)).

• For businesses not under 44AD: audit at turnover above Rs 1 crore, or Rs 10 crore if cash receipts and payments are each 5% or less.