ICAI releases Guidance Note on Tax Audits - 2025 Edition

The Institute of Chartered Accountants of India (ICAI) today released the much-anticipated “Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961” (Revised 2025), the tenth edition of its flagship manual designed to support Chartered Accountants (CA) in navigating the increasingly complex landscape of tax audits.

The 2025 edition incorporates the latest legislative and procedural changes introduced by the Finance (No. 2) Act, 2024 and the Finance Act, 2025, and aligns with new reporting requirements under Forms 3CA, 3CB and, critically, the expanded Form 3CD.

Key updates include Revised clauses about new disclosures under sections 32AC, 32AD, 33AB, 33ABA, 33AC, and head-quarter detail requirements introduced via Notifications No. 27/2024 (March 5, 2024) and No. 23/2025 (March 28, 2025).

The ICAI Guidance Note contains various clarifications, like the one on the 5% cash-receipt/pay-out threshold raising audit applicability from ₹1 crore to ₹10 crore for businesses maintaining low cash receipts under Section 44AB(a).

Offering Detailed guidance on compliance with Income-Computation & Disclosure Standards (ICDS) and the latest Accounting Standards (AS) under the Companies (Accounting Standards) Rules, 2021, it also contains an expanded commentary on the auditor’s professional responsibilities, working-paper maintenance, and ethical considerations under the ICAI Code of Ethics.

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In his foreword, ICAI President CA Charanjot Singh Nanda reminds the readers about the critical role of tax audits in fostering transparency and trust in financial reporting, particularly given the rising intricacies of Form 3CD disclosures and ongoing judicial pronouncements. He commended the Direct Taxes Committee, under the leadership of CA Piyush S Chhajed (Chairman) and CA Vishnu Kumar Agarwal (Vice-Chairman), for delivering this edition within a stringent timeline.

The Guidance Note serves as an indispensable reference for practitioners, offering:

Step-by-Step Reporting Checklists: Ensuring completeness in audit reports under Forms 3CA/3CB and the comprehensive statement in Form 3CD.

Illustrative Examples & Case Studies: Clarifying the treatment of complex transactions, such as derivatives, transfer pricing adjustments, and General Anti-Avoidance Rules (GAAR) disclosures.

Penalty & Compliance Matrix: Summarizing key due-dates, thresholds, and penalty provisions under Sections 271B and 276B in an easy-to-use table.

Template Letters & Engagement Standards: Sample engagement and management representation letters aligned with Council Guidelines No. 1-CA(7)/02/2008.

With tax audit now a statutory requirement for entities exceeding turnover/gross-receipt thresholds₹1 crore (or ₹10 crore under restricted cash dealings) in business and ₹50 lakh in profession, this Guidance Note reinforces the chartered accountant’s role as a guardian of fiscal integrity. It also addresses the widening scope of audits post-2024 amendments, including mandatory disclosures on GST compliance, MSME payments under Section 269ST, and capital-gain reporting under Sections 56(2)(ix)/(x) of the Income Tax Act.

Priced at ₹650 (ISBN 978-93-48313-90-4), the Tenth Edition is available through the ICAI Publications Department and the Institute’s official website of ICAI. Chartered accountants, taxation professionals, and corporate finance teams are encouraged to procure the revised manual to stay abreast of the evolving tax audit framework.

Established by an Act of Parliament, the Institute of Chartered Accountants of India is the national body regulating the profession of chartered accountancy in India. The Direct Taxes Committee proactively engages with legislative developments and disseminates technical updates via publications, webinars, and training programs.

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