Every audit season brings a familiar question to every CA’s desk —
“How many balance sheets can a Chartered Accountant sign?”
For Assessment Year 2025–26 (FY 2024–25), the professional limits under the Income Tax Act and the Companies Act, 2013 remain unchanged.
However, their practical application — especially when dealing with small companies, One Person Companies (OPCs), dormant companies, and regulated entities like insurance brokers or NBFCs — often leads to confusion.
This article explains the audit ceiling framework in detail and how these classifications affect your audit count.
The Two Major Audit Limits Every CA Must Track
(a) Tax Audits under Section 44AB (Income Tax Act, 1961)
Under ICAI guidelines, a Chartered Accountant can perform up to 60 tax audits under section 44AB in a financial year.
If a CA firm has multiple partners, this limit applies per partner.
🧮 Example:
A 3-partner firm can conduct up to 180 tax audits (60 × 3), provided no individual partner signs more than 60.
Audits excluded from this ceiling:
- Presumptive income cases (44AD, 44ADA, 44AE, etc.)
- Company audits under the Companies Act
- Trust, society, or NGO audits
- GST audits
- Co-operative society audits
(b) Company Audits under Section 141(3)(g) of the Companies Act, 2013
A Chartered Accountant (or firm) cannot be appointed as auditor in more than 20 companies at a time.
However, several types of companies are excluded from this count:
- One Person Companies (OPCs):
Private limited companies with a single shareholder. OPCs enjoy relaxed compliance norms and are excluded from the 20-company ceiling. - Small Companies:
Defined under Section 2(85) of the Companies Act, these are private companies with:- Paid-up share capital ≤ ₹4 crore, and
- Turnover ≤ ₹40 crore
(based on the latest profit & loss account).
Small companies are not counted in the 20-audit limit.
- Dormant Companies:
Registered under Section 455, dormant companies are inactive or formed for future projects or to hold assets/intellectual property. Their audits are also excluded from the ceiling.
🧾 Example:
If a CA audits 15 private limited companies, 3 OPCs, and 10 small companies — only 15 audits count toward the statutory limit of 20.
Understanding “Small Company” Status
To qualify as a small company under Section 2(85):
- The company must be private,
- Its paid-up share capital ≤ ₹4 crore, and
- Its turnover ≤ ₹40 crore.
But certain companies are excluded, even if they meet these numbers:
- Public companies
- Holding or subsidiary companies
- Section 8 (non-profit) companies
- Companies or bodies corporate governed by any special Act
The “Special Act” Confusion — Insurance Brokers as an Example
A common professional query is:
“Can a private limited company engaged in insurance broking qualify as a small company?”
Here’s the reasoning:
- Insurance brokers are registered under the Companies Act, 2013,
- But regulated by the IRDAI (Insurance Brokers) Regulations, 2018), framed under the IRDA Act, 1999.
Being regulated by a special Act does not mean being governed by it.
Only companies incorporated under such Acts (e.g., LIC under the LIC Act, IRDAI under the IRDA Act) are excluded from small company status.
Hence, a private limited insurance brokerage firm can still be treated as a small company, if it meets the capital and turnover limits.
A similar principle applies to NBFCs, which, though regulated by the RBI, remain eligible for small company classification if incorporated under the Companies Act.
Audit Limit Summary Table
| Type of Audit | Governing Law | Limit per CA | Excluded from Count |
|---|---|---|---|
| Tax Audit (Sec 44AB) | Income Tax Act, 1961 | 60 audits | Not applicable |
| Company Audit | Companies Act, 2013 | 20 companies | ✅ Small, OPC, and Dormant Companies |
| Other Audits | Trusts, Co-ops, GST, etc. | No fixed limit | N/A |
Key Takeaways for AY 2025–26
- A CA can sign up to 60 tax audit reports under section 44AB.
- The 20-company audit limit excludes small companies, OPCs, and dormant companies.
- Firms with multiple partners can multiply their total tax audit capacity.
- Insurance broker companies, though IRDAI-regulated, are not governed by a special Act — they can qualify as small companies.
- NBFCs follow the same principle.
- No fixed limit applies to audits of trusts, societies, or co-operative entities.
Final Word
For practising Chartered Accountants, staying within audit limits is not just about compliance — it’s about professional credibility.
Understanding which entities count (and which don’t) helps manage audit portfolios efficiently and ethically.
So, the next time you’re finalizing your audit plan, remember:
Your insurance broker client or OPC might not just add value to your practice — it could also help you stay within the limit.