What is a Tax Audit?
There are various kinds of Audits being conducted under different laws such as Company Audit/ Statutory Audit conducted under Company law provisions, Cost Audit, Stock Audit etc. Similarly, Income Tax law also mandates an audit called ‘Tax Audit’
When is Tax Audit applicable ?
A Taxpayer is required to have a Tax Audit carried out if the Sales Turnover or Gross Receipts of Business Exceed Rs. 10 Crores in the Financial Year . If the tax payer is a professional , Tax Audit is applicable if his total Gross receipts exceed Rs. 50 lakhs during the Financial Year
Exceptions To The Above :
- Business
In case of a business , if the Cash Receipts against Sales are more than 5% of the Gross Sales or Turnover, OR if the Cash Payments are more than 5% of the Total Payments , then the turnover limit for Tax Audit is only 1 crore
- Professions
Tax Audit is applicable if The Total Gross Receipts exceed Rs. 50 Lakhs in the Financial Year
Profession Includes the following Professions :
- Interior Decoration
- Technical Consulting
- Engineering
- Accounting
- Legal
- Medical
- Architecture
- Other Professionals, as mentioned below :
Movie Artists includes a Producer , Editor, Actor, Director, Music Director, Art Director, Dance Director, Cameraman, Singer, Lyricist, Story Writer, screenplay or Dialogue Writer and Costume Designers.
Presumptive Tax Scheme for Business & Professionals:
- Business
The Presumptive Taxation Limit under section 44AD is Rs. 2 crore which has been increased to Rs. 3 crore from Financial Year 2023-24 onwards
- Professionals
The Presumptive Taxation Limit under section 44ADA is Rs. 50 Lakhs which has been increased to Rs. 75 Lakhs from Financial Year 2023-24 onwards