FAQs on ceiling for UDIN generation under the Tax Audit category
FAQs on Ceiling for UDIN Generation under the Tax Audit Category
The Institute of Chartered Accountants of India (ICAI) has introduced a ceiling on the number of tax audit assignments that can be counted through the UDIN system. For this purpose, only specified tax-audit sub-categories are included while determining the applicable limit.
The prescribed ceiling is 60 tax audit assignments in a financial year for each Chartered Accountant in practice and is effective from 1 April 2026. The limit is governed by the Chartered Accountants (Limit on Number of Tax Audits) Guidelines, 2025.
Tax Audit Categories Covered by the Limit
For UDIN purposes, the following categories under Section 44AB are included in the computation of the ceiling:
- Form 3CA – Third proviso to Section 44AB.
- Form 3CB – Section 44AB(a).
- Form 3CB – Section 44AB(b).
- Form 3CB (Combined) – Section 44AB.
Categories Not Included in the Ceiling
The following tax-audit categories are excluded from the computation of the specified limit:
- Form 3CB – Section 44AB(c).
- Form 3CB – Section 44AB(d).
- Form 3CB – Section 44AB(e).
Q1. What happens if a UDIN is generated under an incorrect or excluded category to avoid the prescribed tax-audit limit?
Members are required to generate UDINs under the category that correctly corresponds to the tax audit assignment.
ICAI has indicated that it has observed instances where UDINs were generated under categories that do not fall within the applicable ceiling, apparently with the objective of avoiding the prescribed limit.
Members should therefore ensure that the correct category is selected while generating a UDIN. Deliberately using an incorrect or non-applicable category to circumvent the prescribed ceiling may result in disciplinary proceedings under the Chartered Accountants Act, 1949 and the Rules made thereunder.
Chartered Accountants (Limit on Number of Tax Audits) Guidelines, 2025
The guidelines were issued by the Council of ICAI on 25 July 2025 under the powers conferred by Section 15(2)(fa) of the Chartered Accountants Act, 1949.
They apply from 1 April 2026 and prescribe the maximum number of tax audit assignments that a Chartered Accountant in practice may accept and sign during a financial year.
1. Name and Effective Date
These provisions are known as the Chartered Accountants (Limit on Number of Tax Audits) Guidelines, 2025.
They become effective from 1 April 2026.
2. Purpose of the Guidelines
The guidelines regulate the number of tax audit assignments undertaken under Section 44AB of the Income-tax Act, 1961.
3. Important Definitions
For the purposes of these guidelines:
- Act refers to the Chartered Accountants Act, 1949.
- Chartered Accountant in practice means a member of ICAI holding a valid Certificate of Practice under Section 6 of the Act.
- Council means the Council of the Institute constituted under Section 9 of the Act.
- Institute means the Institute of Chartered Accountants of India established under the Chartered Accountants Act, 1949.
Words and expressions that are not specifically defined in these guidelines will have the meanings assigned to them under the Chartered Accountants Act, 1949 and the Rules and Regulations made under it.
4. Maximum Number of Tax Audit Assignments
A Chartered Accountant in practice cannot accept and sign tax audit assignments exceeding the specified limit during a financial year.
Where acceptance of an assignment and signing of the audit report take place in different financial years, the assignment will be counted in the financial year in which the audit report is signed.
5. Limit in the Case of a Firm
For a firm of Chartered Accountants in practice, the prescribed ceiling applies separately with reference to each partner.
Accordingly, the limit is determined based on the number of partners in the firm.
6. Partner Associated with More Than One Firm
If a partner is also a partner in another firm or firms of Chartered Accountants in practice, the tax audit assignments undertaken through all such firms must be considered together for determining that partner’s overall limit.
The combined assignments attributable to the partner cannot exceed the applicable prescribed ceiling.
7. Assignments Accepted in Individual Capacity
If a partner of a Chartered Accountant firm independently accepts tax audit assignments in his or her individual capacity, those assignments are also included while determining the partner’s overall limit.
The aggregate number of assignments undertaken through the firm and individually cannot exceed the applicable ceiling.
8. Certain Tax Audits Excluded from the Limit
Tax audit assignments arising from the following provisions are not counted for determining the specified ceiling:
- Section 44AB(c), relating to persons covered under Section 44AE;
- Section 44AB(d), relating to persons covered under Section 44ADA; and
- Section 44AB(e), relating to persons covered under Section 44AD.
9. Revised Tax Audit Reports
Where an already issued tax audit report is subsequently revised, the revised report is not treated as an additional tax audit assignment for calculating the prescribed limit.
10. What is the Specified Number of Tax Audit Assignments?
The specified ceiling is:
Individual Chartered Accountant / Proprietary CA Firm
A Chartered Accountant in practice or a proprietary firm may undertake up to 60 tax audit assignments in a financial year, irrespective of whether the assessees are corporate or non-corporate entities.
Firm of Chartered Accountants
In the case of a partnership firm of Chartered Accountants in practice, the ceiling is 60 tax audit assignments per partner per financial year.
Thus, the firm’s overall capacity is determined with reference to the number of eligible partners.
11. Each Financial Year’s Audit is a Separate Assignment
While computing the ceiling, an audit relating to each financial year is treated as a separate tax audit assignment.
12. Joint or Combined Assignments
The calculation includes tax audit assignments accepted by the Chartered Accountant or by any partner of the firm, whether the assignment is undertaken:
- independently;
- jointly with another Chartered Accountant; or
- jointly with another Chartered Accountant firm.
Such assignments are included for determining the applicable ceiling.
13. Head Office and Branch Offices
The audit of an entity’s head office together with its branch offices is treated as one tax audit assignment for the purpose of calculating the limit.
Similarly, where a Chartered Accountant audits one or more branches of the same entity, those branch audits are regarded as a single tax audit assignment.
14. Part-Time Practising Partner
A Chartered Accountant who is a part-time practising partner of a firm is not considered while calculating the firm’s tax-audit assignment limit.
15. Maintenance of Records
Every Chartered Accountant in practice is required to maintain records of the tax audit assignments accepted and signed during each financial year.
The records are to be maintained in the format prescribed or specified by the ICAI Council.
16. Replacement of Earlier Guidelines
These guidelines replace the earlier provisions governing the number of tax audit assignments with effect from 1 April 2026.
However, Chapter VI of the Council General Guidelines, 2008, contained in Council Guidelines No. 1-CA(7)/02/2008 dated 8 August 2008, continues to remain applicable up to 31 March 2026.
17. Power to Remove Difficulties
If any practical difficulty arises in implementing these guidelines, the ICAI Council may issue appropriate general or special directions or clarifications, provided that such directions remain consistent with the Chartered Accountants Act, 1949.
Key Takeaway
From 1 April 2026, the prescribed ceiling is generally 60 tax audit assignments per Chartered Accountant per financial year. For a CA firm, the limit is considered 60 assignments per eligible partner. Certain assignments under Section 44AB(c), (d) and (e), as specified in the guidelines, are excluded from this computation.
Members should ensure that each UDIN is generated using the correct applicable tax-audit category. Using an excluded category merely to avoid the prescribed ceiling can have disciplinary consequences.
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