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Under the Income tax section 44AB of the Income tax Act, every person carrying on business is needed to get his accounts audited, if his Total turnover, sales, or gross receipts, in business More than INR 1 Cr in any previous year.
If a person Doing the profession he is needed to get his Books of accounts audited, In case Total receipt in profession More than, INR 50 lakh in any previous year.
With effect from Finance Act 2020, the above threshold limit for a person carrying on business was increased from INR 1 Cr to INR 5 Cr in cases where,-
Above changes is made to decreased compliance burden on MSME enterprises.
It is suggested to increase the threshold from 5 Cr to 10 Cr in circumstances specified above in order to encourage non-cash transactions, promote the digital economy, and further reduce small and medium enterprises’ compliance burden.
Last Year aggregate turnover, sales, or gross receipts limit | Profit Amount with respect to turnover (in %) | Status of Applicable of Tax Audit on Assesses |
Excess than INR Fifty Lakhs | N.A. | Yes, Tax Audit is applicable U/s 44AB(b) |
Upto INR Fifty Lakhs | More than 50% | NO |
Upto INR Fifty Lakhs | less than 50% (Under Section 44ADA) | Yes, Tax Audit is applicable U/s 44AB(d) |
Last Year Turnover limit | Profit Amount with respect to turnover (in %) | In case cash receipts less than 5 Percentage of Turnover | In case cash payment less than 5 Percentage of total payment | Status of Applicable of Tax Audit |
Exceeds than INR Ten Cr. | N. A. | N. A. | N. A. | Yes, Tax Audit is applicable |
Exceeds than INR Two Cr but upto INR Ten Cr | N. A. | Yes | Yes | No |
Exceeds than Two Cr but upto INR Ten Cr | N. A. | No | No | Yes, Tax Audit is applicable |
Exceeds than One Cr but upto Two Cr | Excess than 8 Percentage or 6 Percentage of Turnover | N. A. | N. A. | No |
Exceeds than INR One Cr but upto Two Cr | Less than 8 Percentage or 6 Percentage of Turnover | N. A. | N. A. | Yes, Tax Audit is applicable. |
Less than INR One Crore | More than 8 Percentage or 6 Percentage of Turnover | N. A. | N. A. | No |
Less than INR One Crore | Less than 8 Percentage or 6 Percentage of Turnover | N. A. | N. A. | Yes, Tax Audit is applicable |
Key Note:
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