[FAQs] Introduction & Applicability of Tax Audit | A.Y. 2022-23
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FAQ 1. What is a Tax Audit?
A tax audit is a process to verify whether the books of accounts prepared by a taxpayer comply with the generally accepted accounting principles and the provisions of the Income-tax Act. It is intended to ensure that the books of account and other records are properly maintained and correctly compute the taxpayer’s true income. Such an audit also helps in checking fraudulent practices. A tax audit does not give the assessee any immunity from scrutiny assessment disallowance of expenses1. A tax audit can be conducted only by a Chartered Accountant in practice.
Read More About – Compulsory Audit of Accounts
FAQ 2. In which form the tax audit report has to be obtained?
The tax audit report has to be furnished in the forms prescribed below:
| Category of Taxpayer | Form for Audit Report | Annexure to Audit Report |
| If the books of account of the assessee are required to be audited under any other law | Form 3CA | Form 3CD |
| In any other case | Form 3CB | Form 3CD |
Form No. 3CA/3CB is a format of audit report, whereas Form 3CD is a Statement of particulars required to be furnished under Section 44AB of the Income-tax Act.
If the assessee is required to get his books of accounts audited under any other law, it is sufficient for him to get his accounts audited under that law and furnish a report of such audit and a report in form 3CA and 3CD by a Chartered Accountant by the prescribed due date.
FAQ 3. Who is required to get books of accounts audited?
Section 44AB provides for the audit of books of accounts of an assessee engaged in business or profession. The table below enumerates the requirement to get the books of accounts audited by different taxpayers:
| Nature of Business or Profession | Category of Taxpayer | When is the audit mandatory? |
| Any professions (specified or non-specified) | Any | If gross receipts from the profession during the relevant previous year exceed Rs. 50 lakhs. |
| Business | Both payment and receipt in cash do not exceed 5% of the total receipts and payment, respectively. | If total sales, turnover or gross receipt from the business during the previous year exceeds Rs. 10 crores. |
| Either payment or receipt in cash exceeds 5% of the total receipts and payment, respectively. | If total sales, turnover or gross receipt from the business during the previous year exceeds Rs. 1 crore | |
| Business eligible for presumptive tax scheme under Section 44AD | Resident Individual or HUF | If the assessee’s income exceeds the maximum exemption limit and he has opted for the scheme in any of the last 5 previous years but does not opt for the same in the current year. |
| Business eligible for presumptive tax scheme under Section 44AD | Resident Partnership Firm (Excluding LLP) | The taxpayer has opted for the scheme in any of the last 5 previous years but does not opt for the same in the current year. |
| Profession eligible for presumptive tax scheme under Section 44ADA | Resident Individual or partnership firm (Excluding LLP) | The taxpayer claims that profits from the profession are lower than the profits computed under Section 44ADA, and the total income exceeds the maximum exemption limit. |
| Business eligible for presumptive tax scheme under Section 44AE | Any Assessee engaged in plying, hiring or leasing of goods carriage | The taxpayer claims that the profits from the business are lower than the profit computed under Section 44AE. |
| Business eligible for presumptive tax scheme under Section 44BB | Non-resident assessee engaged in the exploration of mineral oil | The taxpayer claims that his profits from the business are lower than the profit computed under Section 44BB. |
| Business eligible for presumptive tax scheme under Section 44BBB | Foreign Co. engaged in civil construction | The taxpayer claims that his profits from the business are lower than the profit computed under Section 44BBB. |
The provisions for tax audit under Section 44AB are not applicable in the case of an assessee who comes within the purview of Section 44B or Section 44BBA.
FAQ 4. Is a tax audit required if turnover exceeds the specified limit, but total income is below the maximum exemption limit?
Yes, the tax audit is mandatory. Section 44AB does not exempt an assessee from the tax audit simply because its total income does not exceed the maximum exemption limit.
The objective of tax audit under section 44AB is to assist the Assessing Officer in computing the total income of an assessee in accordance with different provisions of the Act. Therefore, even if the total income of a person is below the maximum exemption limit, he will get his accounts audited and furnish the audit report if any condition prescribed under Section 44AB is satisfied.
FAQ 5. How to avail of the benefit of the enhanced limit of Rs. 10 crores for the tax audit?
The increased threshold limit of Rs. 10 crores shall be applicable only if cash receipts and cash payments during the year do not exceed 5% of the total receipt or payment, respectively. In other words, more than 95% of business transactions should be done through banking channels. It should be noted that any payment or receipt by cheque drawn on a bank or by a bank draft, not being an account payee cheque or draft, should be considered payment or receipt in cash. For example, any payment or receipt by a bearer or crossed cheque (not an account payee cheque) should be considered as payment or receipt in cash.
It may be noted that conditions in respect of ‘amounts received’ and ‘payments made’ should be fulfilled separately. A threshold limit of 5% is prescribed separately for receipts/payments and should be applied accordingly. It means that if one of the conditions is not satisfied, the enhanced turnover limit will not apply.
The onus would be on the assessee to prove that he is eligible for an increased threshold limit for not getting his accounts audited. He needs to ensure that his aggregate cash receipts and payments are within the limit of 5%. If he fails to do so, the consequences would be a penalty under Section 271B for failure to get accounts audited. However, if there is reasonable cause, then in terms of Section 273B, such a penalty may not be imposed.
For example, Mr. A is engaged in the business of trading readymade garments. He has a turnover of less than Rs. 10 crores during the financial year 2021-22. He made the following transactions during the relevant year:
| Particulars | Mode of transaction | |
| Cash (Rs. in lakhs) | Bank (Rs. in lakhs) | |
| Receipts | ||
| Sales | 20 | 480 |
| Advance from customers | 10 | 20 |
| Unsecured loan | 10 | 100 |
| Total receipts | 40 | 600 |
| Payments | ||
| Purchase | 15 | 400 |
| Rent | Nil | 50 |
| Loan repayment | 5 | 50 |
| Total Payments | 20 | 500 |
The turnover of Mr. A during the financial year 2021-22 is up to Rs. 10 crores. He shall not be liable for tax audit if his cash receipt and payment during the year do not exceed 5% of the total receipt or payment, as the case may be.
Computation of percentage of cash receipts & payments:
| Particulars | Total (A) | Cash (B) | % in cash (B/A*100) |
| Receipts | 640 | 40 | 6.25% |
| Payments | 520 | 20 | 3.85% |
Though the payment made in cash during the year does not exceed 5% of total payments, the percentage of cash receipts exceeds the limit of 5%. Thus, Mr. A is not entitled to the benefit of the increased threshold limit of Rs. 10 crores for the tax audit. Hence, the tax audit is applicable.
FAQ 6. Can the professionals avail the benefit of the enhanced turnover limit of Rs. 10 Crore for the tax audit?
Clause (a) of Section 44AB talks about a person carrying on a business, whereas clause (b) talks about a person carrying on a profession. The proviso to Section 44AB providing the enhanced turnover limit of Rs. 10 crores for the tax audit is placed below clause (a) to Section 44AB. Thus, the persons engaged in the profession are not entitled to claim an enhanced turnover limit of Rs. 10 crores for the tax audit.
Read More About –Presumptive Scheme for Businesses under Section 44AD
FAQ 7. Whether a person opting for a presumptive taxation scheme under section 44AD is required to get his accounts audited?
Section 44AB prescribes the conditions under which an assessee is required to get his accounts audited. It excludes a person from getting books of account audited if he opts for a presumptive taxation scheme under Section 44AD, provided the turnover of the business does not exceed Rs. 2 crores.
Clause (e) of Section 44AB states that a person, who has opted for the presumptive taxation scheme under Section 44AD in any of the last 5 previous years, but does not opt for the same in the current previous year, shall be liable to get his accounts audited if his total income exceeds the maximum amount not chargeable to tax.
Clause (a) of Section 44AB provides for an audit of books of account if a person is engaged in a business and the turnover of such business exceeds Rs. 1 crore. However, the threshold shall be increased to Rs. 10 crores if the cash receipt and payment do not exceed 5% of the total receipt and payment, respectively.
If an assessee is covered under both the clauses, that is, clause (a) and clause (e) of Section 44AB, will he be liable to get the books of account audited?
For example, if the turnover of an assessee is more than Rs. 1 crore and his cash payment and receipt are less than 5%, is he liable for a tax audit?
Let’s understand this with the help of the table below:
| Situation* | Turnover | Whether liable for a tax audit? |
| The assessee has opted for Section 44AD in any of the last 5 years but is not opting for the same in the current year. | Up to Rs. 1 crore | Yes, if income is more than the maximum amount not chargeable to tax [Section 44AB(e)] |
| Up to Rs. 2 crores | ||
| More than Rs. 2 crores but up to Rs. 10 crores.
|
No [Proviso to Section 44AB(a)] | |
| More than Rs. 10 crores | Yes | |
| The assessee has not opted for Section 44AD in any of the last 5 years and is not opting for the same during the current year as well. | Up to Rs. 10 crores | No [Proviso to Section 44AB(a)] |
| More than Rs. 10 crores | Yes |
* Assuming cash receipts or payments do not exceed 5% of the aggregate amount received or paid during the year.
It should be noted that Clause 8 of Form 3CD requires the auditor to provide the relevant clause under which the tax audit has been conducted.
FAQ 8. Is a salaried employee required to get accounts audited if he is also doing trading in derivatives such as futures and options?
The gains or losses arising from trading in F&O are always taxable under the head ‘Profits and Gains from Business or Profession’. Income or loss from dealing in F&O shall be deemed as normal business income (non-speculative business) even though delivery is not affected in such transactions.
To check the applicability of tax audit in such cases, the turnover from trading in derivatives must be computed first. The computation of turnover is an essential factor as the applicability of a tax audit is determined based on turnover. If total sales, turnover or gross receipt from the business during the previous year exceeds Rs. 1 crore, the tax audit shall be required in such cases. However, the increased threshold limit of Rs. 10 crores shall be applicable if cash receipts and cash payments during the year do not exceed 5% of the total receipt or payment, as the case may be. In other words, more than 95% of business transactions should be done through banking channels.
For example, during the year, Mr. A has earned salary income and incurred losses from trading in futures and options (F&O). The details of his transactions are as under:
| Transaction | Buy Value | Sell Value | Realised P&L | Computation of Turnover |
| Transaction 1 | 40,00,000 | 50,00,000 | 10,00,000 | 10,00,000 |
| Transaction 2 | 60,00,000 | 30,00,000 | (30,00,000) | 30,00,000 |
| Transaction 3 | 75,00,000 | 60,00,000 | (15,00,000) | 15,00,000 |
| Transaction 4 | 3,20,00,000 | 2,00,00,000 | (1,20,00,000) | 1,20,00,000 |
| Transaction 5 | 2,30,00,000 | 1,30,00,000 | 1,00,00,000 | 1,00,00,000 |
| Total | 7,25,00,000 | 4,70,00,000 | (55,00,000) | 2,75,00,000 |
The turnover, in this case, shall be Rs. 2,75,00,000, and the loss from F&O shall be Rs. 55,00,000. The tax audit requirement arises if the business turnover from F&O exceeds Rs. 1 crore. However, the tax audit shall not be required if more than 95% of business transactions are done through banking channels, and turnover is less than Rs. 10 crores. Since in F&O transactions, the trading shall be through digital means only, the enhanced limit of Rs. 10 crores shall apply to determine the applicability of tax audit.
FAQ 9. Analysis of the applicability of tax audit under different scenarios in case of professionals:
| Case | Gross Receipts | Profit | Whether tax audit applicable? | Reason |
| Case 1 | 40 Lakhs | 25 Lakhs | No | Gross receipts are less than Rs. 50 lakhs and profit is more than 50% of the gross receipts. |
| Case 2 | 40 Lakhs | 10 Lakhs | Yes | Profits are lower than 50% of total gross receipts, and total income exceeds the maximum exemption limit. |
| Case 3 | 40 Lakhs | 2 Lakhs | No | Although profits are less than 50% of total gross receipts, but the total income is less than the maximum exemption limit. |
| Case 4 | 70 Lakhs | 50 Lakhs | Yes | Gross receipts exceed Rs. 50 lakhs. |
| Case 5 | 70 Lakhs | 15 Lakhs | Yes | Gross receipts exceed Rs. 50 lakhs. The profit percentage is irrelevant here. |
FAQ 10. Whether the provisions of tax audit apply to the Charitable/Religious Trust?
Sections 11 to 13 are special provisions governing the taxation of charitable or religious institutions. Section 12A provides the conditions to be fulfilled by any trust or institution to claim an exemption under Sections 11 and 12. Registration, maintenance of books of account, audit and filing of return of income are the conditions to be fulfilled to claim the exemption under Sections 11 and 12. Once these conditions are complied with, such an institution’s income shall be computed as per Sections 11 and 12. Section 11(4) provides that ‘property held under trust’ shall include a business undertaking, and Section 11(4A) provides an exemption of income from incidental business activities on fulfilment of the specified conditions.
Nothing in the Act suggests that tax audit under Section 44AB shall apply to a business under Section 11(4A). Sections 11 to 13 are independent of the five heads of income. As long as the registration under Section 12AA/12AB is intact, the income cannot be computed under the five heads of income.
Tax audit is a specific requirement for the assessee having income under the head ‘Business and Profession’. Therefore, there is no obligation on the charitable institutions to get the accounts audited under Section 44AB. However, such organisations are subject to the audit under section 12A(1)(b) read with Rule 17B, and a report of such audit is to be furnished in Form 10B.
Read More About– Computation of Income under Section 11 and 12 Here
[1] Goodyear India Ltd. v. CIT [2009] 112 Taxman 419/246 ITR 116 (Delhi)
Dive Deeper:
FAQs on Disclosures & Reporting in Form 3CD | Tax Audit
FAQs on Computation of Gross Receipts/Turnover | Tax Audit
FAQs on Due Date & Process to file Tax Audit Report
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Whether tax audit u/s 44AB is applicable for the asst. year 2021-22 for an individual assessee whose total turnover is Rs. 2 crores and net taxabale income from business is 1.20 crores and cash receipts is 1.50 crores and cash payments is 50 lakhs?
Yes, since, though his turnover does not exceed the limit of 2 crores in the case of an individual, his receipts and payments exceed 5% of the turnover, therefore tax audit will be applicable.
Assessee has option to opt for presumptive scheme under section 44AD because his turnover is upto 2 Cr. to avoid tax audit.
One person have 2 businesses and one cross 1 crore and other not cross, than audit will be done in both or in one firm and in other firm presumptive audit. It can be Done or not, please suggest
one can opt for presumptive scheme if business is eligible and turnover less than 2 core and for other go for audit.
Hi,
I have business income of Rs. 1 . 5 crores and I’m an individual and i have less than 2 crores turnover and i have more than 5% cash receipts and cash payments. i have paid job work expenses more than Rs. 50 lacs with out deducting TDS iam paying because i have opted for 44AD
Is there any disallownaces for not deducting the TDS??, Is it applicable for 44AD??
and for me Tax Audit is applicable??
one can claim 44AD only till the turnover is up to 2cr, on exceeding the limit of 2cr one can not avail the benefit of sec 44ad, thus normal provisions will be applicable for them where the general limit is 1 cr which extends to 10cr if the cash receipt and payment are up to 5%. For 44AD cases, audit is required only when income lower than presumptive % is declared and such income exceeds the basic exemption level of Rs 2,50,000.00
So turnover being less than 2cr u are eligible for 44ad and assuming that u declare the income as per the presumptive scheme, you don’t need to get your books audited.
further when 44ad is being applied, the tds requirements are relaxed and there is no disallowance
Hiiii
If My Turnover is Upto 2 crore and Cash Receipt Less Than 5%, Can I go For Non Audit Upto 10 Crore Section or I require to Compulsory 44AD Audit , Which option will Be beneficial?
You are not liable to audit upto 10cr if cash receipt and cash payment is <= 5%.
If I not opt for section 44AD till now and also my turnover is not crossing 1 Cr. limit, can I declare my income less than 8% or loss without tax audit u/s 44AB.
no audit even if <8/6
You can declare your income less than 8% or in Loss WIthout tax audit u/s 44ab
I am Salaried Person. I have a Salary Income of Rs. 13 Lakh and F & O Loss of Rs.49000. F & O Turnover is Rs. 11 Lakh. Which ITR need to be file. Is Tax audit applicable? My Last ITR was ITR-2.. Please advice.
Hi Dhaval, Income from trading in derivatives is treated as regular business income. Thus, you have to file ITR-3. Tax Audit will not be available in your case as turnover is not exceeding the limit as prescribed under section 44AB of the Income-tax Act, 1961.
In case where turnover is 8 crs and all in non cash but there is loss. Whether Tax Audit is applicable?
No, If you did not opt 44ad in any of the last 5 previous years.
Hi Krimesh, No, tax audit will not be mandatory.
I am Salaried Person. I have a Salary Income of Rs. 13.5 Lakh and F & O Loss of Rs.1.6L. F & O Turnover is Rs. 7Cr. Which ITR need to be file. Is Tax audit applicable to carry forward losses? Please advice.
Return shall be filed in ITR-3 and tax audit will not be mandatory.
In case where turnover is 5 crs and all in non cash but there is loss. Whether Tax Audit is applicable?
Hi Shalini, tax audit will not be mandatory.
Sir,
I have an F&O turnover of Rs. 3.5crore and a loss of 11 lacs through transactions done completely through FNO banking channels in FY21-22. Will I need to get a tax audit done?
Hi Asad, tax audit will not be mandatory.
Useful article.
It will be more useful if you could kindly clarify the following three things:
1) Is the requirement of tax audit for businesses having below 6% NP on Sales (where 95% receipts/payments are in non-cash) removed now?
2) What constitutes a ‘turnover’ for derivative transactions – since the notional values are huge and cannot be treated as turnover?
3) Are Professionals having gross receipts below Rs50lakhs (eligible for presumptive taxation but not opting for it) require tax audit if they declare less than 50% but more than 6% (all non-cash receipts and payments) of sales as taxable income?
This will be beneficial for many, for sure. Thank you.
All your questions have been answered in the document of Section 44AB on Practice. You may take a 7 days trial to access the document from the following link:
https://www.taxmann.com/practice/Incometax/CompulsoryAuditofAccounts/read/1110000000026734/1/0?cat=read”
MY BUSINESS TURNOVER IS LESS THAN 5 CRORES ANNUALLY, CASH EXP IS LESS THAN 5% AM I APPLICABLE FOR TAX AUDIT.
No tax audit
Hi. Tax audit will not be mandatory if the total sales, turnover or gross receipt from business during the previous year does not exceed Rs. 10 crore and both cash receipt and payment does not exceed 5%.
Is tax audit applicable for AY 2022-23 in the case of F&O Turnover is more than 1cr and loss of 1.5 lakhs and Salary income of 4.5 lakhs?
No, tax audit will not be mandatory.
MY PARTNERSHIP FIRM TURNOVER IS RS.55,00,000/- AND PROFIT IS RS.1,50,000/- AFTER DEDUCTING PARTNERS REMUNERATION AND INTEREST ON CAPITAL RS. 3,50,000/-. IS IT 44AB AUDIT COMPULSARY IN THIS CASE. CAN I FILE WITHOUT CA SIGNATURE WITH BOOKS OF ACCOUNTS .
HI, Tax audit will be mandatory if the firm has opted for the presumptive scheme of Section 44AD in any of the last 5 previous years but does not opt for the same in current year.
If my Business Turnover is less than 2 crore and i opt in 44AD and my F&O turnover exceed 2 Crore did Tax Audit applicable on me ?
Hi, You are not eligible for Section 44AD as total turnover would include the F&O turnover as well.
Proprietorship Turnover 5.2 Crores and net profit in 10 Lakhs only Tax Audit Applicable in this case for the FY 21-22. ( 100% all digital banking Transactions.)
In your case audit turnover limit is 10cr therefor audit is not applicable
Hi, Tax audit will not be mandatory if the total sales, turnover or gross receipt from business during the previous year does not exceed Rs. 10 crore and both cash receipt and payment does not exceed 5%.
Below is info for my case:
Salary: 10 Lakh
turnover in Intraday trading in equity : 13 Lakh
Loss in Intraday trading in equity=1.5 Lakh
Q1: If I file IT return and show 1.5 Lakh in speculative loss under business income ,would I need to do Tax Audit ?
Q2: Do I need to maintain the books of accounts ?
Q3: On the cleartax portal below case requires Tax audit . Is that correct ?
https://cleartax.in/s/tax-audit-section-44ab
Business loss
In case of loss from carrying on of business and not opting for presumptive taxation scheme and Total sales, turnover or gross receipts exceed Rs 1 crore
Hi Suresh, No tax audit will not be mandatory in this case.
AUDIT APPLICABILITY ????
what if:____________ case1_____Case 2___Case 3
1) T/O under 44Ad___1.50cr____1.50cr____1.50cr
2) Normal Business__30lakh___NIL______NIL
__(not opting 44ad)
3) Commission Buss.___NIL____30 lakh___60 Lakh
_____TOTAL________1.80cr____1.80cr_____2.10cr
My annual F&O turnover last year was 66 lacs and I had suffered a loss of 1 lac last year for which I had filed tax return and got it audited. This year my turnover is 1.5 lacs and profit is 30k. I’ve filed my tax returns, should I audit my tax returns by a CA?
Hi Darsh, No tax audit will not be mandatory in this case.
What percentage of profit do i need to declare if tax audit is not applicable ? Since my turnover is 5.5 crore and all transactions are made throgh banking channels.
A cooperative society sold paddy to the WB state govt. for over 1 core(as per market value or so), and as per Govt. contract cooperative society got commissions from govt. for reserve and transportation of paddy, is a tax audit required? or is it mandatory?
HI Antarip, Tax Audit under Section 44AB is required if the business turnover exceeds the prescribed threshold limit. The threshold limit is Rs. 1 Crore. However, the threshold limit shall be Rs. 10 crores if the cash receipt/payments during the year doesn’t exceed 5% of the total receipts/payments.
In your case, the turnover from sale of paddy to government is exceeding Rs. 1 Crore. Further, the amount of commission received from Government for reserve and transportation of paddy shall also be included in the amount of turnover. Thus, tax audit shall be required if the cash receipt/payments during the year exceeds 5% of the total receipts/payments.
I’m Filing ITR of a trust having donation of Rs.39 Lacs for the A.Y. 2022-23, 10B filed, when I’m trying to file the ITR showing error that the 44AB is applicable, Whether 44AB Applicable to a trust?
Hi Abhijith, A trust claiming exemption under Section 11 is required to get its books of accounts audited under Section 12A and not Section 44AB. If you select Section 12A under Audit Information Schedule while filing ITR, the error should not come. The department has recently updated the ITR utility in this respect. Thus, it is advisable to use the latest utility.
If a listed company having turnover of Rs. 3 cr and more than 95% transactions are through bank. Whether they can go without tax audit ?
Hi Rajendra, Tax Audit under Section 44AB is required if the business turnover exceeds the prescribed threshold limit. The threshold limit is Rs. 1 Crore. However, the threshold limit shall be Rs. 10 crores if the cash receipt/payments during the year doesn’t exceed 5% of the total receipts/payments.
As in your case more than 95% transactions are done through banking channel and the turnover is below Rs. 10 crore, tax audit shall not be required.
MY FNO TURNOVER IS 1.98 CRS AND PROFIT OF RS 26 LACS CASH TRANSACTION IS ONLY 2.66 LACSAM I SUBJECT TO TAX AUDIT PLS ADVICE
Hi Ramesh, Tax Audit under Section 44AB is required if the business turnover exceeds the prescribed threshold limit. The threshold limit is Rs. 1 Crore. However, the threshold limit shall be Rs. 10 crores if the cash receipt/payments during the year doesn’t exceed 5% of the total receipts/payments.
As in your case more than 95% transactions are done through banking channel and the turnover is below Rs. 10 crore, tax audit shall not be required.
In my case if assessee is individual and they do tax audit in previous year but in current year they does not exceed the specify limit as per income tax act, 1961 of their turnover, than they have to do there accounts audited in current year also?
Hi Harsh, A person shall be required to get the books of accounts audited if gross turnover or receipts from business or profession during the relevant previous year exceeds the prescribed threshold limit. Thus, tax audit requirement is checked every year. As in your case, the amount of turnover doesn’t exceed the prescribed threshold limit in current year, no tax audit shall be required for that year.
Dear sir,
Pl clarify whether section 44ad is mandatory in nature or optional.
Which section or proviso exempts person from maintaining books of accounts if income declared u/s 44ad because as per 44aa there is no specific exemption for person optin 44ad.
Hi Sir, With regards to the maintenance of books of account, section 44AA provides for the maintenance of books for the person who falls under sub-section (4) to section 44AD. Thus, it can be concluded that the maintenance of books is not required for other persons opting for section 44AD.
For more, you may refer Budget speech of 1992-93 wherein the FM Mr. Manmohan Singh stated that the presumptive taxation scheme is purely optional and such scheme is introduced to avoid the difficulty of maintaining detailed books of account by small shopkeepers & traders.
Our Turnover is less than Rs. 10 Crores and the Net Profit is less than 8% of the Turnover. Our Cash Receipts and Cash Payments are less than 5% of our Turnover. Do we have have to file Tax Audit Rport?
Hi Ramesh, A tax audit under Section 44AB is required if the business turnover exceeds the prescribed threshold limit. The threshold limit is Rs. 1 Crore. However, the threshold limit shall be Rs. 10 crores if the cash receipts/payments during the year don’t exceed 5% of the total receipts/payments. As in your case, more than 95% of transactions are done through banking channels, and the turnover is below Rs. 10 crores, tax audit shall not be required.
yes tax audit is mandatory
Last Year i filed ITR 4 for my Future & option trading ( 0 cash transation) ( Turn over -1.05 Cr, Profit -7 L). This year turn over -2.4 Cr, Profit -9 L ,
1) should I audit my tax returns by a CA?
2) Which ITR form i have to file?
A tax audit under Section 44AB is required if the business turnover exceeds the prescribed threshold limit. The threshold limit is Rs. 1 Crore. However, the threshold limit shall be Rs. 10 crores if the cash receipts/payments during the year don’t exceed 5% of the total receipts/payments. If in your case, more than 95% of transactions are done through banking channels, and the turnover is below Rs. 10 crores, tax audit shall not be required.
My turnover is above Rs. 4 crore and my net profit is around 13%. In which section I havr to file my ITR????
A tax audit under Section 44AB is required if the business turnover exceeds the prescribed threshold limit. The threshold limit is Rs. 1 Crore. However, the threshold limit shall be Rs. 10 crores if the cash receipts/payments during the year don’t exceed 5% of the total receipts/payments. If in your case, more than 95% of transactions are done through banking channels, and the turnover is below Rs. 10 crores, tax audit shall not be required.