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Statutory Audit Applicability: Is Audit Mandatory for Every Company in India?

Understand statutory audit applicability in India and find out whether every company is required to conduct an audit. Learn the rules under the Companies Act, 2013, including audit requirements for private limited companies, public companies, and small companies. Explore auditor appointment, compliance obligations, and key exemptions to understand when a statutory audit is mandatory for businesses in India.

16 October, 2026

Imagine Rohan from Indore. Last year, he registered a private limited company to sell handmade candles online. His sales in the first year were around ₹3 lakh. When his accountant said the audit had to be done, Rohan was shocked. "Audit? For ₹3 lakh? Isn't that only for big companies?

"Many small business owners think the same way. Even CA students often mix up statutory audit, tax audit and internal audit. Let us clear this confusion step by step, in simple words.

Statutory audit meaning

The word "statutory" simply means "required by law". So a statutory audit is an audit that a business must get done because the law says so. It is not a choice.

In this audit, an independent Chartered Accountant checks the company's books of accounts, bills, bank statements and other records. At the end, the auditor gives an opinion on whether the financial statements show a true and fair picture of the business.

Think of it like your board exams. The examiner does not write your answers. The examiner only checks what you wrote and gives a result. In the same way, the auditor does not prepare the accounts. The auditor checks them and gives a result, which is called the audit report.

Why is the law so strict about this? Because shareholders, banks, investors and the tax department all trust these numbers. In 2009, the founder of Satyam Computers admitted that the company's books showed thousands of crores of cash that never existed. That one case showed the whole country why an independent check matters.

Audit of company under which section (Sec 139, 143)

Under the Companies Act, 2013, two sections do most of the work.

Section 139 is about appointing the auditor. The first auditor is appointed by the Board of Directors within 30 days of the company being registered. After that, the shareholders appoint the auditor at the Annual General Meeting (AGM), usually for five years at a time.

Section 143 is about what the auditor does. It gives the auditor the right to see all books and records and to ask the management for explanations. It also requires the auditor to report to the shareholders on whether the accounts are true and fair.

These sections apply to every company: private limited, public limited, One Person Company, and even Section 8 companies that do charity work. So Rohan has his answer. His candle company must appoint an auditor under Section 139 and get its accounts audited under Section 143.

Statutory audit limit: is there a turnover threshold?

This is where most people get confused. For companies, there is no limit. A company with ₹500 crore turnover needs an audit. A company with ₹3 lakh turnover needs an audit. Even a company that did not earn a single rupee all year needs an audit.

For other types of businesses, the rules are different:

Type of business	Is audit compulsory?	Limit
Company (private, public, OPC)	Yes, always	No limit
LLP	Only above the limit	Turnover above ₹40 lakh or partner contribution above ₹25 lakh
Partnership firm or proprietorship	No audit under company law	Only tax audit, if tax limits are crossed
Tax audit (any business)	Only above the limit	Turnover above ₹1 crore (₹10 crore if cash dealings are within 5%), or professional receipts above ₹50 lakh

Tax audit now falls under Section 63 of the Income Tax Act, 2025. Earlier, the same rule was in Section 44AB.

Let us take an example. Priya runs a saree business in Jaipur as a partnership firm. Her turnover is ₹80 lakh, and most customers pay through UPI. She does not need a statutory audit because her business is not a company. She also does not need a tax audit because her turnover is below ₹1 crore. But if she converts the firm into a private limited company, audit becomes compulsory from the very first year.

Also remember that one business can need both audits. A company with ₹5 crore turnover needs a statutory audit under the Companies Act and a tax audit under the income tax law.

Statutory audit due date

The Companies Act does not give one fixed "audit due date". Instead, the audit must be finished before the AGM, because the audited accounts are placed before shareholders in that meeting.

Under Section 96, a company must hold its AGM within six months from the end of the financial year. Most companies close their year on 31 March, so the AGM must happen by 30 September. For a company's very first year, the AGM can be held within nine months.

Here is how the timeline usually looks for a year ending 31 March 2026:

Audit completed and report signed: ideally by August 2026
AGM held: by 30 September 2026
Accounts filed with the ROC in Form AOC-4: within 30 days of the AGM
Annual return filed in Form MGT-7: within 60 days of the AGM

Late filing attracts an additional fee of ₹100 per day for each form. For a small company, this adds up quickly.

If the company also needs a tax audit, that report is due one month before the income tax return due date. This usually works out to 30 September.

Preparing for a career in auditing?

Explore CA Tushar Makkar’s Masterclass for Statutory Audit to strengthen your practical understanding of audit procedures, documentation, and statutory audit requirements.

Statutory audit vs internal audit

Students mix these two up all the time. Here is an easy way to remember. A statutory audit is like the yearly health checkup you need for a fitness certificate. An internal audit is like a personal trainer who watches you all year and tells you what to fix.

Point	Statutory audit	Internal audit
Who needs it	Every company, by law	Only certain larger companies under Section 138; others by choice
Who does it	An outside, independent CA	An employee or an outside firm
Report goes to	Shareholders	Management or the audit committee
How often	Once a year	Throughout the year, often quarterly
Main goal	Opinion on whether accounts are true and fair	Finding weak spots, like leakages in purchases or delays in collections

FAQs

What is statutory audit called in Hindi?

In Hindi, it is called "वैधानिक लेखा परीक्षा" (vaidhanik lekha pariksha), which means an audit required by law.

Is audit mandatory for a private limited company with zero turnover?

Yes. Every company must get its accounts audited, even if it did no business during the year.

Who can be a statutory auditor of a company?

Only a practising Chartered Accountant or a CA firm. An employee of the company cannot be its auditor. Section 141 also stops people with certain shareholdings, loans or business ties with the company.

Is audit compulsory for a partnership firm?

Not under company law. A partnership firm needs a tax audit only if it crosses the income tax limits. Some banks may still ask for audited accounts before giving a loan.

Is statutory audit and tax audit the same?

No. Statutory audit checks whether the accounts are true and fair under the Companies Act. Tax audit checks whether the business has followed income tax rules.

What is the last date for a company audit?

There is no separate date for the audit itself. It must be completed before the AGM, which most companies must hold by 30 September.