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Junior accountants confuse the statutory, tax and internal audits and prepare the wrong documents for each auditor.
Each audit is required by a different law, done by a different person and reports to a different user, but all three test the same bank and TDS reconciliations.
Applicability tests: Companies Act 2013 for statutory and internal audit, income-tax turnover limits for tax audit, loan sanction terms for stock audit.
A clear list of which audits apply to the business, who performs each, and the shared reconciliation pack all of them use.
A statutory audit is required by company law and reports to shareholders on the whole financial statements. A tax audit is required by income-tax law once turnover crosses set limits, and reports tax particulars to the Income Tax Department. An internal audit is the business’s own check on its processes and controls, and reports to the board or audit committee.
They often happen in the same year and look at the same ledgers, but they answer different questions.
How do the main audits compare?
| Audit | Who requires it | Who performs it | What it reports on | How often |
|---|---|---|---|---|
| Statutory | Companies Act 2013 (every company) | Independent CA, appointed by shareholders | True and fair view of financial statements | Yearly |
| Tax | Income-tax law, above turnover limits | A practising CA | Tax particulars clause by clause | Yearly |
| Internal | Companies Act for prescribed classes; otherwise management | Employee or outside firm, not the statutory auditor | Controls, processes, risks | As the board decides, often quarterly |
| GST | Self-certified GSTR-9C above ₹5 crore; department audits possible | The taxpayer certifies; officers may audit | GST paid and claimed | Yearly return |
| Stock | Bank’s sanction terms | CA from the bank’s panel | Stock and debtors behind drawing power | As the bank requires |
| Concurrent | Banks for their own branches | CA firm appointed by the bank | Branch transactions as they happen | Continuous, monthly reports |
The tax audit limit for a business is turnover above ₹1 crore, or ₹10 crore where cash receipts and payments each stay within 5 percent. Under the 1961 Act this is Section 44AB; under the Income-tax Act 2025 it is Section 63.
Can the statutory auditor also do your internal audit?
No. Section 144 of the Companies Act 2013 lists services a company’s statutory auditor may not provide to it, and internal audit is one of them. The logic is independence: an auditor who designed or ran the controls cannot then judge them fairly. The statutory auditor can, however, also sign the tax audit report, and often does.
Does one business need all of them? A ₹6,40,00,000 example
Kiran Components Pvt Ltd has turnover of ₹6,40,00,000 and a bank cash credit limit.
- Statutory audit: yes, every company needs one.
- Tax audit: yes, turnover is above ₹1 crore. If cash dealings stayed within 5 percent, the limit would be ₹10 crore and no tax audit would apply.
- Internal audit: not compulsory, because turnover is below ₹200 crore and borrowings below ₹100 crore. The board may still choose one.
- Stock audit: probably, if the bank’s sanction requires it.
What each looks at in the same ledgers:
| Ledger | Statutory auditor | Tax auditor | Internal auditor |
|---|---|---|---|
| Bank | Year-end reconciliation, bank confirmation | Cash loans and payments above limits | Whether reconciliations are done monthly and reviewed |
| TDS | Liability and expense recorded correctly | TDS deducted, deposited and reported on time | Whether the deduction process has controls |
Why one monthly process serves every auditor
All three audits lean on the same reconciliations: bank statements matched to the books, and TDS deducted agreed with TDS deposited and reported. Done monthly, these give every auditor the same clean evidence. TransactIG matches bank statement lines to the books with an exception queue and audit-ready exports, and reconciles TDS through its TDS reconciliation.
What to read next
- The auditor sent a long document list: what do they actually need and why?
- Internal audit and reconciliation
- Tax audit Form 3CD reconciliation items
Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →