{"id":22984,"date":"2022-08-16T15:32:25","date_gmt":"2022-08-16T10:02:25","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=22984"},"modified":"2026-06-03T02:27:58","modified_gmt":"2026-06-02T20:57:58","slug":"income-tax-audit-limit","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/","title":{"rendered":"What is Income Tax Audit Limit ?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3afe8170b5e\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3afe8170b5e\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Tax_Audit_Limits_Explained_FY_2025%E2%80%9326\" title=\"Tax Audit Limits Explained (FY 2025\u201326)\">Tax Audit Limits Explained (FY 2025\u201326)<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Presumptive_Taxation_Instead_of_maintaining_detailed_books\" title=\"Presumptive Taxation: Instead of maintaining detailed books \">Presumptive Taxation: Instead of maintaining detailed books <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Normal_Business_%E2%80%93_INR_1_Crore_Limit\" title=\"Normal Business \u2013 INR 1 Crore Limit\">Normal Business \u2013 INR 1 Crore Limit<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Professionals_Section_44ADA%E2%80%94INR_50_Lakhs\" title=\"Professionals (Section 44ADA)\u2014INR\u00a050 Lakhs\">Professionals (Section 44ADA)\u2014INR\u00a050 Lakhs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Professionals_Digital_Benefit%E2%80%94INR_75_Lakhs\" title=\"Professionals (Digital Benefit)\u2014INR\u00a075 Lakhs\">Professionals (Digital Benefit)\u2014INR\u00a075 Lakhs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Business_Section_44AD_%E2%80%93_INR_2_Crore\" title=\"Business (Section 44AD) \u2013 INR 2 Crore\">Business (Section 44AD) \u2013 INR 2 Crore<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Business_Digital_Benefit_%E2%80%93_INR_3_Crore\" title=\"Business (Digital Benefit) \u2013 INR 3 Crore\">Business (Digital Benefit) \u2013 INR 3 Crore<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#General_Business_%E2%80%93_INR_10_Crore\" title=\"General Business \u2013 INR 10 Crore\">General Business \u2013 INR 10 Crore<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#If_a_person_is_involved_in_a_profession_chooses_presumptive_taxation_under_section_44ADA\" title=\"If a person is involved in a profession &amp; chooses presumptive taxation under section 44ADA:\">If a person is involved in a profession &amp; chooses presumptive taxation under section 44ADA:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Specified_professions%E2%80%94Sec_44AA\" title=\"Specified professions\u2014Sec 44AA.\u00a0\">Specified professions\u2014Sec 44AA.\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#If_a_person_is_involved_in_business_chooses_presumptive_taxation_Us_44AD\" title=\" If a person is involved in business &amp; chooses presumptive taxation U\/s 44AD:\"> If a person is involved in business &amp; chooses presumptive taxation U\/s 44AD:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Quick_Summary_of_Tax_Audit_Limits_Explained_FY_2025%E2%80%9326\" title=\"Quick Summary of Tax Audit Limits Explained (FY 2025\u201326)\">Quick Summary of Tax Audit Limits Explained (FY 2025\u201326)<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#New_Criteria_for_Tax_Audit_Applicability_under_Income_Tax_Act_2025\" title=\"New Criteria for Tax Audit Applicability under Income Tax Act, 2025\">New Criteria for Tax Audit Applicability under Income Tax Act, 2025<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Key_Highlights_of_Tax_Audit_Changes_in_Income_Tax_Act_2025\" title=\"Key Highlights of Tax Audit Changes in Income Tax Act, 2025\">Key Highlights of Tax Audit Changes in Income Tax Act, 2025<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Major_Shift_for_Low-Profit_Businesses\" title=\"Major Shift for Low-Profit Businesses\">Major Shift for Low-Profit Businesses<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Old_vs_New_Tax_Audit_Framework_under_Income_Tax_Act_2025\" title=\"Old vs New Tax Audit Framework under Income Tax Act, 2025\">Old vs New Tax Audit Framework under Income Tax Act, 2025<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Introduction_of_Unified_Audit_Form_26\" title=\"Introduction of Unified Audit Form 26\">Introduction of Unified Audit Form 26<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#Graded_Fee_for_Delay_in_Audit_Report\" title=\"Graded Fee for Delay in Audit Report\">Graded Fee for Delay in Audit Report<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/carajput.com\/blog\/income-tax-audit-limit\/#No_Penalty_for_Failure_of_Tax_Audit_Us_271B_in_Case_of_Reasonable_Causes_with_Case_Laws\" title=\"No Penalty for Failure of Tax Audit U\/s 271B in Case of Reasonable Causes with Case Laws.\">No Penalty for Failure of Tax Audit U\/s 271B in Case of Reasonable Causes with Case Laws.<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-32063\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/tax-audit-limit.jpeg\" alt=\"tax audit limit \" width=\"930\" height=\"1395\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/tax-audit-limit.jpeg 480w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/tax-audit-limit-200x300.jpeg 200w\" sizes=\"(max-width: 930px) 100vw, 930px\" \/><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"Tax_Audit_Limits_Explained_FY_2025%E2%80%9326\"><\/span><span style=\"color: #000080;\"><strong>Tax Audit Limits Explained (FY 2025\u201326)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>Tax Audit: A <\/strong>tax audit means accounts must be checked and certified by a chartered accountant u\/s 44AB. When a tax audit under the Income Tax Act is NOT required, based on turnover, type of taxpayer, and conditions. A tax audit is no longer only about turnover; it depends heavily on the scheme opted for (44AD\/44ADA), cash transactions, and profit declared.<\/p>\n<p>Tax audit applicability = Turnover + Scheme + Cash % + Profit declared.<\/p>\n<p>A small mistake (wrong scheme or underreporting profit) \u2192 Audit + Penalty + Notice<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Presumptive_Taxation_Instead_of_maintaining_detailed_books\"><\/span><span style=\"color: #000080;\"><strong>Presumptive Taxation: Instead of maintaining detailed books <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>44AD (Business): Profit deemed @6%\u20138%<\/li>\n<li>44ADA (Professionals): Profit deemed @50%<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>This helps avoid audits and simplify compliance<\/strong><\/span><\/p>\n<ul>\n<li>An audit may still be required if the taxpayer declares profit lower than prescribed %<\/li>\n<li>AND your income exceeds basic exemption limit<\/li>\n<li>Other audit cases: As per other sections (like 44AB clauses)<\/li>\n<li>Cash condition is very important: Cash receipts &amp; payments must be \u2264 5% to get higher limits<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Normal_Business_%E2%80%93_INR_1_Crore_Limit\"><\/span><span style=\"color: #000080;\"><strong>Normal Business \u2013 <\/strong><strong>INR <\/strong><strong>1 Crore Limit<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>No audit required if:\n<ul>\n<li>Turnover \u2264 INR 1 crore<\/li>\n<li>OR profit declared under Section 44AD (presumptive taxation)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>If turnover exceeds INR 1 crore \u2192 Audit required (unless eligible for higher digital limits).<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Professionals_Section_44ADA%E2%80%94INR_50_Lakhs\"><\/span><span style=\"color: #000080;\"><strong>Professionals (Section 44ADA)\u2014INR<\/strong><strong>\u00a0<\/strong><\/span><strong><span style=\"color: #000080;\">50 Lakh<\/span>s<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>No audit required if:\n<ul>\n<li>Gross receipts \u2264 INR 50 lakh<\/li>\n<li>And taxpayer opts for 44ADA (presumptive scheme)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>If receipts exceed INR 50 lakh \u2192 Audit required<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Professionals_Digital_Benefit%E2%80%94INR_75_Lakhs\"><\/span><span style=\"color: #000080;\"><strong>Professionals (Digital Benefit)\u2014INR<\/strong><strong>\u00a0<\/strong><strong>75 Lakhs<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>No audit if:\n<ul>\n<li>Receipts \u2264 INR 75 lakh<\/li>\n<li>AND cash receipts \u2264 5%<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>A benefit is given for digital transactions<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Business_Section_44AD_%E2%80%93_INR_2_Crore\"><\/span><span style=\"color: #000080;\">Business (Section 44AD) \u2013 INR 2 Crore<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>No audit if:\n<ul>\n<li>Turnover \u2264 INR 2 crore<\/li>\n<li>And taxpayer opts for 44AD<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>This is basic presumptive scheme limit<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Business_Digital_Benefit_%E2%80%93_INR_3_Crore\"><\/span><span style=\"color: #000080;\"><strong>Business (Digital Benefit) \u2013 <\/strong><strong>INR <\/strong><strong>3 Crore<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>No audit if:\n<ul>\n<li>Turnover \u2264 INR 3 crore<\/li>\n<li>AND:\n<ul>\n<li>Cash receipts \u2264 5%<\/li>\n<li>Cash payments \u2264 5%<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Higher limit for digital businesses<\/p>\n<h3><span class=\"ez-toc-section\" id=\"General_Business_%E2%80%93_INR_10_Crore\"><\/span><span style=\"color: #000080;\">General Business \u2013 INR 10 Crore<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>No audit if:\n<ul>\n<li>Turnover \u2264 INR 10 crore<\/li>\n<li>AND:\n<ul>\n<li>Cash receipts \u2264 5%<\/li>\n<li>Cash payments \u2264 5%<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Maximum relaxation for fully digital businesses<\/p>\n<h3><span class=\"ez-toc-section\" id=\"If_a_person_is_involved_in_a_profession_chooses_presumptive_taxation_under_section_44ADA\"><\/span><span style=\"color: #000080;\"><strong>If a person is involved in a profession<\/strong><strong> &amp; chooses presumptive taxation under section <\/strong><strong>44ADA<\/strong><strong>:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table width=\"727\">\n<tbody>\n<tr>\n<td><span style=\"color: #000080;\"><strong>Last year&#8217;s aggregate turnover, sales, or gross receipts limit <\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>Profit Amount with respect to turnover (in %)<\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>Status of Applicability of Tax Audit on Assesses<\/strong><\/span><\/td>\n<\/tr>\n<tr>\n<td>Excess than INR Fifty Lakhs<\/td>\n<td>N.A.<\/td>\n<td>Yes, a tax audit is applicable U\/s 44AB(b)<\/td>\n<\/tr>\n<tr>\n<td>Upto INR Fifty Lakhs<\/td>\n<td>More than 50%<\/td>\n<td>NO<\/td>\n<\/tr>\n<tr>\n<td>Upto INR Fifty Lakhs<\/td>\n<td>less than 50% (Under Section 44ADA)<\/td>\n<td>Yes, a tax audit is applicable U\/s 44AB(d)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22985\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/tax-audit.jpg\" alt=\"tax audit\" width=\"900\" height=\"800\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/tax-audit.jpg 900w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/tax-audit-300x267.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/tax-audit-768x683.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/tax-audit-800x711.jpg 800w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><\/h3>\n<h3><span class=\"ez-toc-section\" id=\"Specified_professions%E2%80%94Sec_44AA\"><\/span><span style=\"color: #000080;\"><strong>Specified professions\u2014Sec 44AA.\u00a0<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div>\n<p>U\/s 44AA of the Income Tax Act, certain occupations are classified as \u201cspecified professions,&#8221;\u00a0for which maintenance of books of accounts is mandatory. These include:<\/p>\n<ul>\n<li>Professional services rendered in the field of engineering, such as consulting engineers, structural engineers, and those engaged in technical certification, design, and drafting services. The legal profession covers services provided by advocates and law firms. Other specified professions include company secretaries, cost accountants, and chartered accountants.<\/li>\n<li>The medical profession comprises doctors and other healthcare practitioners. Services related to interior decoration, including planning, designing, and consulting, are also covered. The advertising profession, along with activities of film artists such as directors, actors, and cameramen, falls within this category.<\/li>\n<li>Further, the architectural profession includes services provided by architects and architectural firms. The scope also extends to technical consultancy, covering professionals such as business and marketing consultants.<\/li>\n<li>An authorised representative, being a person who represents another individual before any tribunal or authority for a fee, is also included. Additionally, sports professionals\u2014including players, coaches, trainers, physiotherapists, commentators, umpires, event managers, and sports writers\u2014are recognised under specified professions.<\/li>\n<\/ul>\n<\/div>\n<h3><span class=\"ez-toc-section\" id=\"If_a_person_is_involved_in_business_chooses_presumptive_taxation_Us_44AD\"><\/span><span style=\"color: #000080;\"><strong> If a person is involved in business &amp; chooses presumptive taxation U\/s 44AD:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table style=\"height: 971px;\" width=\"825\">\n<tbody>\n<tr>\n<td><span style=\"color: #000080;\"><strong>Last year&#8217;s turnover limit <\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>Profit Amount with respect to turnover (in %)<\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>In case cash receipts less than 5 percent of Turnover<\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>In case cash payment less than 5 <\/strong>percent<strong> of total payment<\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>Status of Applicability of Tax Audit <\/strong><\/span><\/td>\n<\/tr>\n<tr>\n<td>Exceeds INR Ten Cr.<\/td>\n<td>N. A.<\/td>\n<td>N. A.<\/td>\n<td>N. A.<\/td>\n<td>Yes, a tax audit is applicable<\/td>\n<\/tr>\n<tr>\n<td>Exceeds than INR Two Cr but is up to INR Ten Cr<\/td>\n<td>N. A.<\/td>\n<td>Yes<\/td>\n<td>Yes<\/td>\n<td>No<\/td>\n<\/tr>\n<tr>\n<td>Exceeds than Two Cr but upto INR Ten Cr<\/td>\n<td>N. A.<\/td>\n<td>No<\/td>\n<td>No<\/td>\n<td>Yes, Tax Audit is applicable<\/td>\n<\/tr>\n<tr>\n<td>Exceeds one Cr but upto Two Cr<\/td>\n<td>Excess than 8 percent or 6 percent of Turnover<\/td>\n<td>N. A.<\/td>\n<td>N. A.<\/td>\n<td>No<\/td>\n<\/tr>\n<tr>\n<td>Exceeds than INR One Cr but upto Two Cr<\/td>\n<td>Less than 8 percent or 6 percent of Turnover<\/td>\n<td>N. A.<\/td>\n<td>N. A.<\/td>\n<td>Yes, a tax audit is applicable.<\/td>\n<\/tr>\n<tr>\n<td>Less than INR One Crore<\/td>\n<td>More than 8 percent or 6 percent of Turnover<\/td>\n<td>N. A.<\/td>\n<td>N. A.<\/td>\n<td>No<\/td>\n<\/tr>\n<tr>\n<td>Less than INR One Crore<\/td>\n<td>Less than 8 percent or 6 percent of Turnover<\/td>\n<td>N. A.<\/td>\n<td>N. A.<\/td>\n<td>Yes, a tax audit is applicable<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><strong>Key Note:<\/strong><\/p>\n<ul>\n<li>If total income is more than the basic exemption limit, only then is a tax audit applicable.<\/li>\n<li>Where the income taxpayer is covered under section 44AB, then he is required to get the books of accounts audited by a CA.<\/li>\n<li><a href=\"https:\/\/carajput.com\/publications\/draft-observation-for-tax-auditor-in-case-of-tax-audit-and-draft-of.pdf\">Income tax Audit report<\/a> would be furnished under the form 3CB CD, where a report of a tax audit complete by the CA is to be filed in Form No. 3CB &amp; details of the audit are to be reported in Form No. 3CD.<\/li>\n<li>In case the income taxpayer is liable for income tax &amp; that person fails to complete the tax audit of the firm&#8217;s books of accounts, then he is responsible for a payment of penalty of the lower of the two below:\n<ul>\n<li>Rs. 150,000 or<\/li>\n<li>0.5 percent of total receipts.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Quick_Summary_of_Tax_Audit_Limits_Explained_FY_2025%E2%80%9326\"><\/span><span style=\"color: #000080;\"><strong>Quick Summary of Tax Audit Limits Explained (FY 2025\u201326)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table style=\"height: 441px;\" width=\"824\">\n<tbody>\n<tr>\n<td><span style=\"color: #000080;\"><strong>Category<\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>Limit<\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>Condition<\/strong><\/span><\/td>\n<\/tr>\n<tr>\n<td>Business (Normal)<\/td>\n<td>INR 1 Cr<\/td>\n<td>Basic<\/td>\n<\/tr>\n<tr>\n<td>Professionals<\/td>\n<td>INR 50 L<\/td>\n<td>44ADA<\/td>\n<\/tr>\n<tr>\n<td>Professionals (Digital)<\/td>\n<td>INR 75 L<\/td>\n<td>Cash \u2264 5%<\/td>\n<\/tr>\n<tr>\n<td>Business (44AD)<\/td>\n<td>INR 2 Cr<\/td>\n<td>Presumptive<\/td>\n<\/tr>\n<tr>\n<td>Business (Digital)<\/td>\n<td>INR 3 Cr<\/td>\n<td>Cash \u2264 5%<\/td>\n<\/tr>\n<tr>\n<td>Business (General Digital)<\/td>\n<td>INR 10 Cr<\/td>\n<td>Cash \u2264 5%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<div><\/div>\n<div>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&#8217; compliance burdens. Revised audit limit = INR 10 crore (for businesses with minimal cash). The professional limit remains INR 50 lakhs (INR 75 lakhs with digital benefits). Correct classification and compliance is critical to avoid penalties and notices<\/div>\n<div>\n<h2><span class=\"ez-toc-section\" id=\"New_Criteria_for_Tax_Audit_Applicability_under_Income_Tax_Act_2025\"><\/span><span style=\"color: #000080;\"><strong>New Criteria for Tax Audit Applicability under Income Tax Act, 2025<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-32068\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/Tax-audit-chnage.jpeg\" alt=\"New Criteria for Tax Audit\" width=\"907\" height=\"835\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/Tax-audit-chnage.jpeg 720w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/Tax-audit-chnage-300x276.jpeg 300w\" sizes=\"(max-width: 907px) 100vw, 907px\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Key_Highlights_of_Tax_Audit_Changes_in_Income_Tax_Act_2025\"><\/span><span style=\"color: #000080;\"><strong>Key Highlights of Tax Audit Changes in Income Tax Act, 2025<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Earlier under Section 44AB (1961 Act), the audit was primarily based on turnover thresholds<\/p>\n<p>Now under Section 63 (Income Tax Act, 2025): An audit is required if turnover exceeds prescribed limits OR profit is below the prescribed presumptive rate (6% \/ 8%). This means even businesses with turnover below \u20b91 crore may require an audit if profits are low.<\/p>\n<p>Tax Audit Changes for Businesses: Affected Groups: Small traders, retail businesses, contractors, and startups with low profit margins. Tax audits may have compliance issues. Impact like Higher audit coverage, Increased documentation requirements, Need for accurate bookkeeping and early planning before ITR filing. Businesses must reassess their audit position if<\/p>\n<ul>\n<li>Turnover is below INR 1 crore<\/li>\n<li>Profit margins are below 6% \/ 8%<\/li>\n<\/ul>\n<p>Such businesses may now fall under mandatory tax audit, even if they were previously exempt.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Major_Shift_for_Low-Profit_Businesses\"><\/span><span style=\"color: #000080;\"><strong>Major Shift for Low-Profit Businesses<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Under the old law, if a taxpayer never opted for presumptive taxation, an audit was generally not triggered based on profit level. Under the new law:<\/p>\n<ul>\n<li>Audit becomes mandatory if profit &lt; 6% \/ 8%<\/li>\n<li>Applicable even if presumptive taxation was never adopted<\/li>\n<\/ul>\n<p>This significantly expands audit coverage to Low-margin businesses, Cash-intensive industries and Startup \/ early-stage businesses<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Old_vs_New_Tax_Audit_Framework_under_Income_Tax_Act_2025\"><\/span><span style=\"color: #000080;\"><strong>Old vs New Tax Audit Framework under Income Tax Act, 2025<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table style=\"height: 362px;\" width=\"824\">\n<tbody>\n<tr>\n<td><span style=\"color: #000080;\"><strong>Particulars<\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>Income Tax Act, 1961<\/strong><\/span><\/td>\n<td><span style=\"color: #000080;\"><strong>Income Tax Act, 2025<\/strong><\/span><\/td>\n<\/tr>\n<tr>\n<td>Audit Trigger<\/td>\n<td>Turnover exceeds threshold<\/td>\n<td>Turnover OR low profit<\/td>\n<\/tr>\n<tr>\n<td>Low Profit Case<\/td>\n<td>No audit if presumptive not opted<\/td>\n<td>Audit mandatory if profit &lt; 6% \/ 8%<\/td>\n<\/tr>\n<tr>\n<td>Audit Forms<\/td>\n<td>3CA \/ 3CB \/ 3CD<\/td>\n<td>Unified Form 26<\/td>\n<\/tr>\n<tr>\n<td>Penalty<\/td>\n<td>0.5% of turnover (max \u20b91.5 lakh)<\/td>\n<td>Fixed graded fee<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3><span class=\"ez-toc-section\" id=\"Introduction_of_Unified_Audit_Form_26\"><\/span><span style=\"color: #000080;\"><strong>Introduction of Unified Audit Form 26<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The new law replaces multiple audit forms: Forms 3CA \/ 3CB \/ 3CD. With a single: Form 26 (Unified Audit Report). Benefits of New Tax Audit Simplified compliance, Standardized reporting and Reduced complexity.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Graded_Fee_for_Delay_in_Audit_Report\"><\/span><span style=\"color: #000080;\"><strong>Graded Fee for Delay in Audit Report<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A major structural change is the replacement of penalties with fixed fees. New Fee Structure:<\/p>\n<ul>\n<li>INR 75,000 \u2192 Delay up to 1 month<\/li>\n<li>INR 150,000 \u2192 Delay beyond 1 month<\/li>\n<\/ul>\n<p>Key Difference in Tax Audit: Fee is predetermined and no discretionary relief by the Assessing Officer (AO). Earlier: Penalty depended on AO discretion; Now Strict and predictable compliance cost<\/p>\n<p>Relief Provision as per Tax Audit Changes: Although fees are fixed. Relief may still be available in genuine cases under reasonable cause provisions; however, the flexibility is significantly reduced.<\/p>\n<\/div>\n<h3><span class=\"ez-toc-section\" id=\"No_Penalty_for_Failure_of_Tax_Audit_Us_271B_in_Case_of_Reasonable_Causes_with_Case_Laws\"><\/span><span style=\"font-family: Arial, Helvetica; color: #000080;\"><b>No Penalty for Failure of Tax Audit U\/s 271B in Case of Reasonable Causes with Case Laws.<\/b><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>If the tax audit report is not submitted on time or before the deadline, no penalty under section 271B will be enforced. The provisions of section 271B must be applied, however, if the audit report is not submitted by the deadline.<\/li>\n<li>No Penalty for Failure of Tax Audit under section 271B of the Income Tax Act, 1961, in case of Reasonable Causes with Case Laws<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">Hope the information will assist you in your professional endeavors. For query or help, contact: <a href=\"mailto:singh@carajput.com\">singh@carajput.com<\/a>\u00a0or call at 9555555480<\/p>\n<p>Popular blog:<\/p>\n<ul>\n<li><a href=\"https:\/\/carajput.com\/learn\/new-tds-deduction-provision-prevent-cash-transactions-of-more-than-1-crore-section-194n.html\"><strong>New TDS deduction No cash transactions exceeding 1 Crore -Section 194N<\/strong><\/a><\/li>\n<li><strong><a href=\"https:\/\/carajput.com\/learn\/deductions-under-section-80ccd-of-income-tax-act.html\">Deduction u\/s 80CCD of Income Tax Act, 1961<\/a><\/strong><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Tax Audit Limits Explained (FY 2025\u201326) Tax Audit: A tax audit means accounts must be checked and certified by a chartered accountant u\/s 44AB. When a tax audit under the Income Tax Act is NOT required, based on turnover, type of taxpayer, and conditions. A tax audit is no longer only about turnover; it depends &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[117],"tags":[5479,3294],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/22984"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=22984"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/22984\/revisions"}],"predecessor-version":[{"id":32064,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/22984\/revisions\/32064"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=22984"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=22984"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=22984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}