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Daily Intelligence Capsule — 23 August 2026

Latest EditionLatest Edition — Sunday, 23 August 2026

Lead Briefing

Section 44AB Is Now Section 63: What Practitioners Need to Confirm Before the 30 September Tax Audit Deadline

Income Tax / Practical Compliance Guide

Section 44AB of the Income-tax Act, 1961 is renumbered as Section 63 under the Income-tax Act, 2025. Forms 3CA/3CB/3CD remain the operative audit forms for FY 2025-26 (AY 2026-27), due 30 September 2026 -- the consolidated Form No. 26 applies only from tax year 2026-27 onward. Thresholds are unchanged (Rs 1 crore / Rs 10 crore with the 5% cash test / Rs 50 lakh for professionals), and the settled professional consensus excludes GST from turnover for this threshold test under Section 145A.

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Did You Know

Section 145A's Inclusive Definition Doesn't Apply to the Section 44AB/63 Threshold Test

Section 145A of the Income-tax Act -- which requires GST and other taxes to be included in the value of sale, purchase and inventory -- only applies for the purpose of determining income chargeable under the head Profits and gains of business or profession. That narrow scoping is precisely why the settled professional position excludes GST from turnover when testing Section 44AB (now Section 63) tax audit applicability -- a different question from how income itself is computed once the audit threshold is crossed.

Quiz of the Day

A Trader's Turnover Sits Right at the Rs 1 Crore Line

Your client is a trader whose books show gross turnover of Rs 95 lakh for FY 2025-26, computed after excluding GST charged separately and remitted to the Government. If GST were added back, reported turnover would cross Rs 1.05 crore. The client did not get accounts audited under Section 44AB (now Section 63), relying on the GST-excluded figure being below the Rs 1 crore threshold. Is excluding GST the settled professional consensus, and what is the maximum Section 271B penalty exposure if the Assessing Officer disputes this? Answer: Yes, excluding GST is the settled consensus per Section 145A's limited scope, though it is not backed by a specific CBDT circular. If audit is ultimately held required, the Section 271B penalty is 0.5% of turnover, capped at Rs 1,50,000, subject to reasonable cause under Section 273B.