Audit and certification · Audit and assurance

What is the difference between a statutory audit, a tax audit and an internal audit?

Short answer

A statutory audit gives an independent opinion on whether the financial statements give a true and fair view; it is compulsory for every company. A tax audit, under the Income-tax Act, checks and reports the particulars the tax law needs, once turnover crosses the limit. An internal audit reviews controls, processes and risks for management; it is compulsory only for listed and larger companies. A company's statutory auditor cannot be its internal auditor.

Side by side

	Statutory audit	Tax audit	Internal audit
Law	Companies Act, 2013 (and other laws for banks, trusts, cooperatives)	Income-tax Act, 2025, section 63	Companies Act, section 138, for specified companies; otherwise voluntary
Who needs it	Every company; LLPs above the limits	Businesses above ₹1 crore turnover (₹10 crore with little cash), professions above ₹50 lakh, some presumptive cases	Listed companies, and others above the limits below
Purpose	Opinion on whether the accounts give a true and fair view	Report on particulars for tax: disallowances, TDS, loans, cash transactions and others	Review of controls, processes and risks, for the board and management
Report to	Members (shareholders)	Income Tax Department, through the e-filing portal	Audit committee or board
Standards	Standards on Auditing (SA)	ICAI Guidance Note on Tax Audit	Standards on Internal Audit (SIA)
Who can do it	Independent CA in practice	CA in practice	CA, cost accountant, other professional, or an employee

When internal audit is compulsory

Under rule 13, besides listed companies:

unlisted public companies with paid-up capital of ₹50 crore or more, turnover of ₹200 crore or more, borrowings of more than ₹100 crore, or deposits of ₹25 crore or more; and
private companies with turnover of ₹200 crore or more, or borrowings of more than ₹100 crore.

Can one firm do all three?

The statutory auditor of a company cannot be its internal auditor (section 144).
The statutory auditor can also do the tax audit, and often does, because the work overlaps.
The statutory auditor also cannot provide bookkeeping, accounting, or certain other services to the company it audits.

Legal basis

Sections 138, 139, 143 and 144, Companies Act, 2013; rule 13, Companies (Accounts) Rules, 2014
Section 63, Income-tax Act, 2025 (formerly section 44AB)

Official sources

By CA Ameesh Gupta, FCA, DISA (ICAI) | Last reviewed: 8 November 2026. General information, not advice on your facts: the law changes and outcomes depend on the details of each case.