FAQs on Tax Audit – Based on ICAI’s Views in Guidance Note on Tax Audit – Revised 2025 Edition]

Description

FAQs on Tax Audit is a practitioner‑oriented, clause‑wise handbook on tax audit under section 44AB. It distils the ICAI’s Guidance Note (GN) on Tax Audit (Revised 2025) into focused questions and answers, mapping every reporting requirement in Forms 3CA/3CB/3CD to practical procedures, documentation, and e‑filing steps. The Edition is specifically ‘Based on ICAI’s views in Guidance Note on Tax Audit’, ensuring alignment with the latest forms, utilities, and professional pronouncements. The book covers all Form 3CD clauses (Chapters 17–63) with ‘how‑to‑fill’ guidance, supported by specimen language, checklists, and cross‑references to Standards on Auditing and the Guidance Note.

This book is intended for the following audience:

• Chartered Accountants in practice handling tax audits of corporate and non‑corporate assessees
• Audit Partners, Managers & Articled Assistants who need clause‑wise, form‑linked answers
• CFOs/Finance Heads, Controllers & Tax Leads seeking to understand 44AB requirements, documentation and disclosures
• Internal Auditors & Compliance Teams aligning financial reporting with tax audit reporting
• Academics & Learners requiring an authoritative, FAQ‑based companion to the ICAI Guidance Note

The Present Publication is the 2025 Edition, updated till 30th August 2025. This book is edited by Taxmann’s Editorial Board, with the following noteworthy features:

• [Authoritative Alignment with ICAI 2025 Guidance Note] The coverage mirrors the structure and positions of the Revised 2025 Guidance Note on Tax Audit, including the requirement to incorporate SA‑700 style responsibility paragraphs within Form 3CA/3CB observations
• [Limit on Number of Tax Audits Guidelines] Clear answers on counting accepted assignments under the still‑operative 2008 rules through 31‑03‑2026, and what changes from 01‑04‑2026 under the 2025 Guidelines (e.g., revised TARs excluded from the cap, sharing of per‑partner limits disallowed)
• [UDIN—What to Generate & Where to Quote] Step‑by‑step on UDIN generation for tax audits, the four mandatory key fields for 44AB assignments, when separate UDINs are needed (e.g., Form 29B), and the ‘one UDIN per assignment’ rule for 3CA/3CB with 3CD
• [Clause‑wise, Utility‑first Guidance] E‑filing walkthroughs for tricky clauses—Clause 11 (books & documents), Clause 32(e) (speculation business), Clause 34(a)/(b) (TDS/TCS), Clause 42 (SFT Forms 61/61A/61B), Clause 44 (GST‑wise expenditure)—with exactly what to ‘Select/Add Details’ in the utility and what to keep in workpapers
• [Ready‑to‑use Engagement Letters] Sample audit engagement letters tailored for 3CA‑3CD (statutory audit already done) and 3CB‑3CD scenarios, including clauses on UDIN disclosures, digital‑signature safeguards, confidentiality, AML/anti‑corruption, end‑use, termination, and management representations
• [Case‑law & Guidance Note Based Positions] Integrated judicial references (e.g., treatment of reimbursements; classification nuances) and explicit GN‑2025 pointers throughout

The coverage of the book is as follows:

• Applicability & Thresholds (Section 44AB)
  • Who must be audited; 10‑crore threshold where 95% receipts and payments are non‑cash; treatment of presumptive codes and the third proviso (further report by an accountant)
• Who Can/Can’t Audit
  • Qualifications/disqualifications of the tax auditor; internal auditor/employee restrictions; appointment of CA firms; interaction with Section 288(2) ‘accountant’
• Cap on Audits—Old vs New Regime
  • Counting under Council General Guidelines 2008 till 31‑03‑2026 (accepted assignments basis; multi‑year for same client counts separately; HO+branches = one assignment; joint audits count for each), and the 2025 Guidelines effective from 01‑04‑2026 (e.g., revised TARs excluded)
• Tax Audit Reports (3CA/3CB) & ‘Specified Date’
  • Forms matrix; 30th September TAR filing cut‑off (for assessees subject to audit); pre‑issuance principles; signing practices; digital filing
• Standards on Auditing & Responsibility Paragraphs
  • Where and how to embed SA‑700 style ‘assessee’s responsibility’ and ‘auditor’s/practitioner’s responsibility’ content inside Para 3 of Form 3CA/Para 5 of 3CB
• UDIN
  • FAQs on who generates UDIN in firms, allocation among partners, no separate UDIN for 3CA/3CD (one assignment), and the mandatory fields for 44AB engagements; model AEL wording to disclose portal sharing
• Clause‑wise Drill‑downs (Form 3CD)
  • Clause 11 (Books & Documents) – Inclusive definition of ‘document’ referencing Section 2(22AA) and how to fill the utility
  • Clause 32(e) (Explanation to Section 73) – Identifying deemed speculation business and reporting approach
  • Clause 33 (Chapter VI‑A/10A/10AA) – Section‑wise tabular reporting
  • Clause 34(a)/(b) (TDS/TCS) – Verification steps, what to report, and the exact ‘Add Details’ fields
  • Clause 42 (SFT—Forms 61/61A/61B) – Focusing on filing status and completeness of reporting, including where to list deficiencies if space is limited
  • Clause 43 (CbCR u/s 286) – Filing status guidance (with no requirement to audit the CbCR contents—contrasted with Clause 42)
  • Clause 44 (GST‑wise Expenditure) – What not to include (e.g., depreciation, bad debts), what must be reconciled, and how to treat Schedule‑III items like salaries
• Specimen Engagement Letters (Chapters 64–65)
  • Complete AELs for 3CA‑3CD and 3CB‑3CD—with UDIN portal disclosure, digital‑signature controls, confidentiality, AML/anti‑corruption, governance communications, working papers, end‑use, and termination
• Appendix
  • Relevant sections of the Income‑tax Act for quick reference

The structure of the book is as follows:

• 65 Chapters & Appendix – The text is sequenced to mirror a practitioner’s workflow: applicability → eligibility & limits → financial statements basis → standards & forms → UDIN/liabilities/revision → clause‑wise Form 3CD reporting → engagement letter templates
• FAQ Format – It enables quick look‑ups and precise answers aligned with ICAI’s positions
• Form‑linked Navigation – This ensures that preparers and reviewers can move seamlessly between statutory requirements and reporting clauses