ICAI Releases Draft of Revised Tax Audit Guidance Note

The Institute of Chartered Accountants of India (ICAI), through its Direct Taxes Committee (DTC), has released the Exposure Draft of the Revised Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961. This significant update reflects the numerous legislative, regulatory, and procedural changes that have occurred in recent years, including amendments to Form 3CD through the Income-tax Rules and evolving interpretations through judicial pronouncements and CBDT notifications.

The Guidance Note, first introduced in 1985 following the enactment of Section 44AB by the Finance Act, 1984, is a vital document that aids chartered accountants in discharging their responsibilities in conducting tax audits. The current revision (2025) integrates updates from the Implementation Guide on Revision in Form No. 3CD issued in March 2024 and incorporates amendments from the recent Income-tax (Fourth Amendment) Rules, 2024 and the Income-tax (Eighth Amendment) Rules, 2025. Notably, several clauses in Form 3CD, such as Clauses 8A, 12, 18(ca), 19, 21, 22, 26, and 31, have been revised, and new clauses like 36B have been introduced, while Clauses 28 and 29 have been omitted.

Key highlights of the exposure draft include clarification of the turnover thresholds for audit applicability, updated reporting requirements for professionals and businesses (especially under presumptive taxation), detailed treatment of gross receipts, and examples of scenarios involving speculative transactions, derivatives, GST implications, and professional reimbursements.

ICAI has invited stakeholders to submit their comments and suggestions on the draft by July 20, 2025, providing an opportunity for professionals and industry participants to shape the final guidance. The comments for the exposure draft may be submitted through the link provided on the ICAI website.

This initiative reiterates ICAI’s commitment to continuous professional guidance, ensuring consistency and clarity in the tax audit process aligned with current legal frameworks.

Click here to access the Exposure Draft

Click here to access the ICAI Notification

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