Founders often confuse the company law audit with the income tax audit under section 44AB, which does have turnover limits. The two are separate, and a company may need one, or both.
Appointing the auditor
- First auditor: appointed by the board within 30 days of incorporation. If the board does not, the members appoint one at an extraordinary general meeting within 90 days. The first auditor holds office until the first AGM.
- Subsequent auditor: appointed at the first AGM for a term of five years, until the sixth AGM.
- ADT-1: the company files it with the ROC within 15 days of the meeting that appoints the auditor. See auditor appointment.
- Rotation: compulsory rotation after the term limits applies to private companies only above specified paid-up capital or borrowing levels; most small private companies are outside it.
What a small private company does not have to report
- CARO 2020: the auditor's additional report does not apply to an OPC, a small company, or a private company that is not a subsidiary or holding company of a public company and has paid-up capital plus reserves up to ₹1 crore, borrowings up to ₹1 crore at any time in the year, and revenue up to ₹10 crore.
- Internal financial controls: the auditor's report on internal financial controls is not required for an OPC, a small company, or a private company with turnover below ₹50 crore and borrowings below ₹25 crore.
- Cash flow statement: not required for an OPC, small company or dormant company.
Statutory audit vs tax audit
| Statutory audit | Tax audit | |
|---|---|---|
| Law | Companies Act, 2013 | Income-tax law (section 44AB for FY 2025-26) |
| Who needs it | Every company | Turnover above ₹1 crore (₹10 crore if cash is within 5%), and some other cases |
| Report | Auditor's report on the financial statements | Form 3CA with 3CD |
| Filed with | ROC, with AOC-4 | Income-tax portal |
For the tax audit, see tax audit under section 44AB.
After the audit: the annual filings
- Hold the AGM within six months of the year end, by 30 September (the first AGM within nine months of the end of the first financial year). An OPC does not hold an AGM and files its financial statements within 180 days of the year end.
- File the audited financial statements in AOC-4 within 30 days of the AGM.
- File the annual return in MGT-7 or MGT-7A within 60 days of the AGM.
- See annual ROC filing for fees and late fees.
A company that has no business and does not plan any can apply for dormant status or consider closing the company; see also should you strike off a dormant company.
Talk to Regikart
Our Chartered Accountants audit private companies and OPCs, including companies with little or no activity, and our Company Secretaries handle ADT-1, AOC-4 and MGT-7. See statutory audit or call or WhatsApp +91 70444 94804.
Frequently asked questions
Is audit mandatory for a private limited company with no turnover?
Yes. Every company must have its financial statements audited every year, whatever its turnover, even if it did no business.
Is audit mandatory for an OPC?
Yes. An OPC is a company and needs a statutory audit, although it is exempt from CARO and some other reporting.
Who appoints the first auditor of a company?
The board, within 30 days of incorporation. Failing that, the members appoint one within 90 days at an extraordinary general meeting.
When is ADT-1 filed?
Within 15 days of the meeting at which the auditor is appointed.
Is tax audit the same as statutory audit?
No. The statutory audit is under the Companies Act and applies to every company; the tax audit is under income-tax law and applies above turnover limits.
About the author
Regikart CA Team
Chartered Accountants at Regikart. Want to discuss this in the context of your business?
