What are the various tax audit limit as per Income tax act?
Under section 44AB, every person who is engaged in business or profession is required to conduct tax audit and gets his books of accounts audited by a practicing Chartered Accountant if during the previous the turnover or gross receipts of the assessee is more than Rs. 1 crore in case of business or Rs. 50 Lakhs in case of profession.
In case the person is covered under presumptive taxation scheme of Income tax act than the assessee is required to conduct tax audit if the income from business is less than 8% of the total turnover in case of business assessee or less than 50% of the total receipts in case of person carrying professions.
The Finance Act 2020, has made amendment under section 44AD and increased the turnover limit to Rs. 5 crore. In order to qualify for the limit, the assesee is required to fulfill 2 conditions as follows:
a. total cash receipts during the previous year is less than 5% of the total receipts, and;
b. total cash payment during the previous year is less than 5% of the total payments.
If a person has opted for presumptive scheme under section 44ADA and he claims his income lower than the deemed profits and his income exceeds the ceiling for chargeability of income tax, is also required to get tax audit done.
Amendment made by Finance Act 2021 in Tax audit limit:
In order to incentivise non-cash transactions to promote digital economy and to further reduce compliance burden of small and medium enterprises, it has been proposed to increase the threshold from five crore rupees to ten crore rupees in cases as above the same shall be applicable from 1st April 2021.
The following are the list of persons who are required to get their accounts audited under section 44AB:
| Category of person | Threshold limit exceeding which tax audit is mandatory |
| The person carrying on business | Total sales / turnover / gross receipts exceed Rs 1 Crore in Any previous financial year. |
| The person carrying on profession | Gross receipts exceed Rs 50 Lakhs in any previous year. |
The person carrying on business covered under section 44AE or section 44BB or section 44BBB | Income claimed by the person is lower than the deemed Profit under respective sections in any previous year. |
| The person carrying on profession covered under section 44ADA | Income claimed by the person is lower than the deemed Profit and income exceeds the specified threshold limit In any previous year. |
| The person carrying on business to whom provisions of section 44AD (4) are applicable | Income exceeds the specified threshold exemption limit In any previous year. |
What is the due date of Tax Audit?
| Compliance | Due date |
| Furnishing Tax audit report under section 44AB | On or before 30th September 2021 |
| Filing of Income tax return of person liable for Tax audit | On or before 30th October 2021 |
Filing of Income tax return of person not liable for Tax audit | On or before 30th July 2021 |
| Filing of Income tax return of person who is a partner in a partnership firm and firm is liable for Tax audit | On or before 30th October 2021 |
Filing of Income tax return of person who is a partner in a firm not liable for audit | On or before 30th July 2021 |