Different Types of Audit in India (2026): A Complete Guide
Audit is no longer a once-a-year formality in India. In 2026, a single company may face several parallel audits, each governed by a different law, conducted by a different professional, and serving a different purpose. Understanding which audit applies to you and why helps you stay compliant, avoid penalties, and use audit findings to actually strengthen your business. This guide from TAXAJ walks through the main types of audit applicable in India today, who conducts each, when they apply, and what they are meant to achieve.
What is an audit?
An audit is an independent, systematic examination of records, processes, or systems to verify accuracy, legality, and reliability. Some audits are mandated by statute; others are voluntary tools management uses for control and assurance. Broadly, Indian audits fall into two groups — those required by law (statutory, tax, cost, secretarial, internal for larger companies) and those driven by management or lenders (stock, forensic, concurrent, management, IS audits).
Statutory audit (Companies Act, 2013)
A statutory audit is the mandatory financial audit of a company’s books under Sections 139 to 143 of the Companies Act, 2013. It applies to every company incorporated in India — private or public, profit or loss, regardless of turnover. LLPs are audited only if turnover exceeds Rs 40 lakh or capital contribution exceeds Rs 25 lakh.
- Who conducts it: An independent practising Chartered Accountant (CA) or CA firm appointed by shareholders.
- Purpose: To give a true and fair view of the financial statements and confirm compliance with accounting standards.
Tax audit (Section 44AB, Income Tax Act)
A tax audit examines accounts to ensure income and deductions are correctly reported for income-tax purposes. For AY 2026-27, the thresholds are:
- Business: Turnover above Rs 1 crore. This is raised to Rs 10 crore where both cash receipts and cash payments stay within 5% of the respective totals.
- Profession: Gross receipts above Rs 50 lakh.
- Presumptive cases: Also triggered where a taxpayer declares income lower than the presumptive rate under Section 44AD or 44ADA and exceeds the basic exemption limit.
It is conducted by a practising CA, who files Form 3CA/3CB along with Form 3CD. Missing the deadline attracts a penalty under Section 271B of 0.5% of turnover, up to Rs 1,50,000.
Internal audit (Section 138)
Internal audit reviews internal controls, risk management, and operational efficiency on an ongoing basis. Under Section 138 and Rule 13, it is mandatory for every listed company, and for others crossing prescribed limits.
- Unlisted public companies: paid-up capital of Rs 50 crore or more, turnover of Rs 200 crore or more, borrowings of Rs 100 crore or more, or deposits of Rs 25 crore or more (any one).
- Private companies: turnover of Rs 200 crore or more, or borrowings of Rs 100 crore or more.
It is conducted by a CA, a Cost Accountant, or another professional decided by the Board — who must be independent of the statutory auditor.
Cost audit (Section 148)
Cost audit verifies cost records of companies in specified regulated and non-regulated sectors under Section 148 and the Companies (Cost Records and Audit) Rules, 2014. It broadly applies to regulated sectors with overall turnover of Rs 50 crore or more (and covered product turnover of Rs 25 crore or more), and non-regulated sectors with turnover of Rs 100 crore or more (and covered product turnover of Rs 35 crore or more).
- Who conducts it: A practising Cost Accountant (CMA), reporting in Form CRA-3 and filed via CRA-4.
- Purpose: To verify cost of production and ensure efficient resource use.
Secretarial audit (Section 204, Form MR-3)
Secretarial audit checks compliance with company law, securities laws, and other applicable regulations. Under Section 204, it is mandatory for every listed company, every public company with paid-up capital of Rs 50 crore or more or turnover of Rs 250 crore or more, and every company with outstanding bank/PFI borrowings of Rs 100 crore or more.
- Who conducts it: A Company Secretary in practice (PCS), reporting in Form MR-3.
- Purpose: To confirm the company follows corporate and regulatory laws.
GST audit
The compulsory CA/CMA-certified GST audit was withdrawn from FY 2020-21. Today the annual return GSTR-9 applies where aggregate turnover exceeds Rs 2 crore, and a self-certified reconciliation statement in GSTR-9C is required where turnover exceeds Rs 5 crore. Beyond self-certification, two departmental audits exist:
- Departmental audit (Section 65): conducted by the Commissioner or authorised GST officers.
- Special audit (Section 66): conducted by a CA or CMA nominated by the Commissioner where records are complex or values are doubtful.
Other important audits
Stock / inventory audit
A verification of physical stock against book records, usually required by banks and lenders where inventory or receivables are pledged. It is typically conducted by a CA or empanelled valuer to confirm the security backing a loan.
Forensic audit
A specialised investigation into suspected fraud, misappropriation, or financial irregularity, often used in litigation or by regulators. It is conducted by forensic accountants or Certified Fraud Examiners, and aims to gather evidence that can stand in court.
Concurrent audit
A continuous, real-time audit of transactions as they occur, common in banks and large treasuries. Conducted by CAs or internal teams, it catches errors and irregularities early rather than after year-end.
Management audit
A voluntary review of the effectiveness of management decisions, policies, and performance. Conducted by internal experts or consultants, it focuses on improving efficiency rather than verifying figures.
Information systems (IS) audit
An audit of IT systems, data security, and controls, increasingly important as records go digital. It is conducted by a DISA-qualified CA or Certified Information Systems Auditor (CISA) to assess data integrity and cyber controls.
Comparison overview
| Audit type | Who conducts it | Applicability |
|---|---|---|
| Statutory audit | Chartered Accountant | All companies (Sec 139-143) |
| Tax audit (44AB) | Chartered Accountant | Business > Rs 1 cr / Rs 10 cr; profession > Rs 50 lakh |
| Internal audit (138) | CA / CMA / professional | Listed & companies above turnover/borrowing limits |
| Cost audit (148) | Cost Accountant (CMA) | Specified sectors above cost-record limits |
| Secretarial audit (204) | Company Secretary (PCS) | Listed & larger public companies |
| GST audit (65/66) | GST officers / CA / CMA | On departmental selection or order |
| Stock audit | CA / valuer | Lender-driven, secured borrowers |
| Forensic audit | Forensic accountant | On suspicion of fraud |
| Concurrent audit | CA / internal team | Banks, treasuries |
| Management audit | Consultant / expert | Voluntary |
| IS audit | DISA / CISA professional | IT-dependent entities |
Which audits apply to you?
Most companies deal with at least a statutory audit, and many add tax, cost, secretarial, or internal audits as they grow. Getting the mapping right — and appointing the correct professional for each — avoids penalties and duplicated effort. If you are unsure where to begin, the team at TAXAJ can help you scope every applicable audit and manage your statutory audit compliance end to end.
Frequently asked questions
Is statutory audit compulsory even for a company with no turnover?
Yes. Statutory audit under the Companies Act applies to every registered company irrespective of turnover, profit, or activity. Even a dormant or zero-revenue company must have its accounts audited by a CA each year.
Can the same CA do both statutory audit and internal audit?
No. To preserve independence, the statutory auditor cannot also act as the company’s internal auditor. The two roles must be held by different professionals.
Is GST audit by a CA still mandatory in 2026?
The compulsory CA/CMA-certified GST audit was removed from FY 2020-21. A self-certified GSTR-9C is required above Rs 5 crore turnover, but a professional audit only arises through a departmental audit (Section 65) or special audit (Section 66).
What is the penalty for missing a tax audit?
Under Section 271B, failure to get accounts audited or furnish the report on time attracts a penalty of 0.5% of turnover or gross receipts, subject to a maximum of Rs 1,50,000.
Who conducts a cost audit?
A cost audit is conducted only by a practising Cost Accountant (CMA), not a Chartered Accountant, and the report is filed with the MCA in Form CRA-4.
