Every company registered under the Companies Act, 2013 must have its financial statements audited each year by a Chartered Accountant in practice, whatever its size or turnover. There is no exemption for small or inactive private companies.
The board appoints the first auditor within 30 days of incorporation. After that, the auditor is appointed at the AGM for a term of five years, and the company informs the ROC in Form ADT-1 within 15 days of the meeting.
The auditor also reports under the Companies (Auditor’s Report) Order, 2020 (CARO), unless the company qualifies for an exemption. A private company that is not a holding or subsidiary of a public company is exempt from CARO if its paid-up capital and reserves do not exceed ₹1 crore, its borrowings do not exceed ₹1 crore at any time in the year, and its revenue does not exceed ₹10 crore.
Key points
- Audit is compulsory for every company, including those with no business
- First auditor: appointed by the board within 30 days of incorporation
- Later auditors: appointed at the AGM for five years, intimated in ADT-1
- CARO reporting applies unless the small private company exemption is met
- An auditor who resigns files Form ADT-3 within 30 days
General information only, not professional advice. Section references are to the Income-tax Act, 1961; corresponding provisions of the Income-tax Act, 2025 apply from 1 April 2026. Thresholds and dates may change by notification.
