Statutory audit vs tax audit — two different things
The word "audit" gets used for two separate requirements, and confusing them leads founders either to over-worry or to miss one.
A statutory audit is required of every Indian company under the Companies Act — full stop. There is no turnover floor below which a company is exempt; a company that did almost no business still needs its financial statements audited by an independent chartered accountant. This is the audit that supports the AOC-4 financials filed with the ROC.
A tax audit under Section 44AB of the Income-tax Act is different. It is triggered by size — it applies once the company's turnover (or gross receipts) crosses the threshold set in the law. A small company below that threshold may have no tax-audit obligation at all, even though it still must have its statutory audit. The exact threshold figure has changed over the years and varies with conditions, so it's confirmed against the current rule rather than assumed.
| Audit | Who needs it | Trigger |
|---|---|---|
| Statutory (Companies Act) | Every company | Always — any turnover |
| Tax audit (Section 44AB) | Companies over the limit | Turnover above the threshold |
The takeaway is simple: the statutory audit is unavoidable, while the tax audit depends on how much the company turned over. A company may need one, or both.
The company files its own tax return
A private limited company is a separate taxpayer from its shareholders and directors. It files its own income-tax return — the corporate return — declaring its income and paying tax at the rate applicable to companies, quite apart from any personal return you file as an NRI on your own income.
The company return's due date depends on whether the company is subject to a tax audit. Broadly, a company that needs a tax audit has a later filing date than one that doesn't, because the audit has to be completed first. Where a tax audit applies, the audit report is filed before the return, and the two dates are coordinated so neither slips.
This is one place an overseas founder's instinct misleads: filing your personal NRI return does nothing for the company's obligation, and vice versa. They are distinct returns to the same department, each on its own footing — which is why they're tracked separately.
Quarterly payroll TDS on salaries (Form 24Q)
The moment your company pays a salary, it takes on an employer's withholding duty: it must deduct tax at source from each employee's pay where their income is taxable, deposit that tax with the government, and report it.
The quarterly report for tax deducted on salaries is Form 24Q. It is filed every quarter and reconciles the salary paid and the TDS deducted for each employee. At year end, the figures feed the employees' Form 16, the salary TDS certificate they rely on for their own returns. Get 24Q wrong or late and the employees' Form 16 and tax credits go wrong with it.
For a company built specifically to hire a team in India — a common reason an NRI founder sets one up — payroll TDS is a recurring, every-quarter obligation, not an annual one. It runs alongside the company's other TDS duties (for example, on vendor payments) and is part of the routine monthly and quarterly rhythm a CA keeps for you, rather than something dealt with once a year.
It all rests on the books being kept
None of the above works without proper books of account underneath. The statutory audit examines them, the tax audit (where it applies) reports on them, the company return is built from them, and the payroll TDS reconciles to the salary entries in them. Books kept properly through the year make every downstream filing routine; books left to year end make all of it a scramble.
For an overseas owner, the reassuring part is that this is fully a remote operation. Cloud accounting, shared documents and digital signatures mean the bookkeeping, the audit coordination, the company return and the quarterly 24Q can all be run with you abroad and a CA in India — you approving and signing, them preparing and filing.
The order is what matters: the books are kept current month by month, the audit is done after year end, the return follows the audit, and the payroll TDS runs on its own quarterly track throughout. Kept in that rhythm, the company's compliance is steady rather than a once-a-year emergency.