Advanced Direct Tax Laws and Practice · Tax Audit

Tax Audit Report and Prescribed Forms Explained

Updated 11 October 2026 · Fact-checked

A tax audit report is the accountant's signed and verified report on the assessee's accounts, given in the prescribed form with prescribed particulars. Under section 63, the assessee must furnish it by the specified date, one month before the return due date. Section 44(6) and section 348 apply the same report-filing idea in other cases.

Understand Tax Audit Report and Prescribed Forms

A tax audit has two parts. First, an accountant audits your books for the tax year. Second, the accountant gives a report in a prescribed form. Section 63(3) says the assessee must furnish the report by the specified date, in the form prescribed, duly signed and verified by the accountant, setting forth the particulars prescribed.

The Act gives the frame. The form and the list of clauses sit in the rules. So in the exam, quote the section for the duty and the timing, and describe the form's contents in general terms. Do not invent clause numbers you are unsure of.

The report works as a statement of facts. The accountant reports on the books and on prescribed particulars, such as how items were treated. The Assessing Officer then uses these particulars to check claims. That is why the form needs the accountant's signature and verification.

Timing is simple. Under section 63(5)(a), the specified date is one month before the due date for furnishing the return under section 263(1). The audit must be complete, and the report furnished, by that date. Missing it is a compliance default.

The Act has other audit-report situations. If another law already requires audit of your accounts, section 63(4) lets that audit count, provided you get it done before the specified date and also furnish the accountant's report in the prescribed form by that date. Section 44(6) needs an audit report for a non-company, non-co-operative assessee to claim preliminary expense amortisation. Section 348 needs an audit report for a registered non-profit organisation whose income crosses the basic exemption limit.

Key rules to remember

Duty to furnish report: Report of audit, in prescribed form, signed and verified by the accountant, furnished by the specified date (s 63(3)); The form and particulars are prescribed. The Act fixes the duty.
Specified date: Specified date = due date for return under s 263(1) − one month (s 63(5)(a)); Audit must be done before this date, and the report furnished by it.
Audit under another law: Audit under that law before the specified date + furnish its report with the accountant's report in prescribed form by that date (s 63(4)); Avoids a second audit, but the prescribed-form report is still needed.
Turnover limits for business: Business: turnover above ₹1 crore; ₹10 crore if cash receipts and cash payments are each at most 5%. Profession: gross receipts above ₹50 lakh (s 63(1)); Triggers the audit that leads to the report.
Non-account-payee cheque or draft: Non-account-payee cheque or bank draft = cash (s 63(5)(b)); Counts for the 5% cash tests.
Preliminary expenses claim: Non-company, non-co-operative assessee: audit before the specified date, plus report for the first claim year (s 44(6)); Without this, no deduction under s 44(1).
Non-profit audit: Total income before Part exemptions above the maximum amount not chargeable to tax: audit by an accountant and report by the prescribed date (s 348); Report is in the prescribed form, signed and verified.

How to solve Tax Audit Report and Prescribed Forms questions

Use this order for any question on the tax audit report.

1Identify why an audit report is needed: s 63 turnover or receipts, deemed-profit cases, another law's audit, s 44(6) or s 348.
2Check whether audit applies. Apply the thresholds, and test the 5% cash conditions if the ₹10 crore limit is claimed.
3Count non-account-payee cheques and drafts as cash.
4Fix the specified date: return due date under s 263(1) minus one month.
5State what must be furnished: the report in prescribed form, signed and verified by the accountant, with prescribed particulars.
6Apply special rules if present: s 63(4) for audit under another law, s 63(2) where deemed profits are declared.
7Conclude: say who files, what, by when, and the consequence of default or missing audit.
8Add practical points: obtain the accountant's report before filing and keep the books ready.

Quickest way: Four-line tax audit report check

When to use it: Short case questions asking whether and when a report is required.

Trigger: which limit or provision applies?
Cash test: if ₹10 crore is claimed, check both cash limits of 5%.
Date: return due date minus one month.
Deliverable: prescribed-form report, signed and verified; add the other-law report if s 63(4) applies.

Common mistakes in Tax Audit Report and Prescribed Forms

Treating the return due date as the date for the report.
Students link both to the same return.
Fix: The report is due on the specified date, one month before the return due date.
Saying audit under the Companies Act removes the tax audit report.
Students read s 63(4) loosely.
Fix: You still furnish the accountant's report in the prescribed form by the specified date.
Ignoring account-payee status when testing cash limits.
Cheques look like banking payments.
Fix: A cheque or draft that is not account payee is deemed cash under s 63(5)(b).
Quoting clause numbers of the form from memory.
Students try to show detail.
Fix: Describe contents in words and cite the section only if sure. The form is prescribed, not in the Act.
Applying s 63 to presumptive profit cases.
Turnover exceeds the limit, so audit seems automatic.
Fix: Under s 63(2), s 63 does not apply where profit is declared as per s 58(2) or s 61(2). Audit applies if profit is claimed lower than deemed profit.
Forgetting audit reports for s 44(6) and s 348.
Students link audit report only to s 63.
Fix: List all three provisions where a report is a condition or duty.

Worked examples

Example 1

Sharma Traders, a proprietorship, has turnover of ₹3 crore. Cash receipts are 4% of receipts and cash payments are 7% of payments. Is a tax audit report required?

Show the solution

Turnover exceeds ₹1 crore, so the basic limit is crossed.
The ₹10 crore limit needs cash receipts at most 5% and cash payments at most 5%.
Receipts are 4%, which passes. Payments are 7%, which fails.
So the ₹10 crore limit does not apply; the ₹1 crore limit stays.
Turnover of ₹3 crore exceeds ₹1 crore, so audit applies under s 63(1).

Answer: Yes. Because cash payments exceed 5%, the ₹1 crore limit applies. The accounts must be audited and the report furnished in the prescribed form by the specified date.

Example 2

Mehta Pvt Ltd is audited under another law. Explain what it must do to comply with s 63 and when.

Show the solution

s 63(4) applies where another law requires audit.
The company must get the accounts audited under that law before the specified date.
It must also furnish, by that date, the report of that audit along with the accountant's report in the prescribed form.
The specified date is one month before the return due date under s 263(1).
Example: if the due date were 31 October, the specified date would be 30 September.

Answer: Mehta Pvt Ltd complies if it completes the other-law audit and furnishes both reports by the specified date, one month before the return due date.

Exam tips

Write the section number for each duty: s 63(3) for furnishing, s 63(5)(a) for the date.
In case questions, show the 5% cash arithmetic for both receipts and payments.
Draft practical advice: appoint the accountant early and finish before the specified date.
Mention s 44(6) and s 348 when the question concerns preliminary expenses or non-profits.
Describe form contents generally; avoid unsure clause numbers.

Practice questions from Tax Audit

Tax Audit Report and Prescribed Forms in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CA FinalTax Auditor Appointment and Audit Report Forms

Tax Audit Report and Prescribed Forms: frequently asked questions

What is the due date for the tax audit report?

The report must be furnished by the specified date. Under s 63(5)(a), this is one month before the due date for the return under s 263(1).

Who signs the tax audit report?

An accountant signs and verifies it. s 63(3) requires the report in the prescribed form, setting forth the prescribed particulars.

Does audit under another law replace the tax audit report?

Not fully. Under s 63(4), you must get that audit done before the specified date and furnish its report with the accountant's report in the prescribed form.

Is a tax audit needed for presumptive taxation?

Generally no. s 63(2) excludes assessees declaring profit as per s 58(2) or 61(2). The Table in s 63(1) still applies if profit is claimed lower than deemed profit.