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Income Tax Audit Applicability at Glance

Section 44B of Income Tax Act, 1961

Section 44AB provides provisions relating to the class of Income taxpayers who are required to get their accounts audited from a chartered accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant.

Tax Audit Applicability for Individual/HUF/firm engaged in Business

 

Conditions

Tax Audit Applicability

Relevant Provision

Previous Year Turnover

Net Profit (%)

Cash Payment and Cash Receipts

Turnover > 5 Crore

-

-

Yes

Section 44AB(a)

Turnover between 2 to 5 crore

-

If more than 5%

Yes

Section 44AB(a)

Turnover between 1 to 2 Crore

Net profit > 8% or 6% of turnover

(opts for presumptive taxation scheme under section 44AD​ )

-

No

-

Turnover between 1 to 2 Crore

Net profit < 8% or 6% of turnover

-

Yes

Section 44AB(a)

Turnover up to 1 Crore

Net profit > 8% or 6% of turnover

-

No

-

Turnover up to 1 Crore

Net profit < 8% or 6% of turnover

(opts for presumptive taxation scheme under section 44AD​ )

-

Yes

Section 44AD(e)

 

Tax Audit Applicability for Individual/HUF/firm engaged in Profession

 

Previous Year Turnover

Net Profit (%)

Tax Audit Applicability

Relevant Provision

Turnover > 50 lakh

-

Yes

Section 44AB(b)

Turnover > 50 lakh

Net Profit > 50 % of turnover

No

-

Turnover < 50 lakh

Net Profit < 50 % of turnover

Yes

Section 44AB(b)

 

Tax Audit Due Date

 

Particulars

Due date

Extended Due date

Tax Audit (A.Y 2021-22)

30th September 2021

31st October 2021

 

Penal provisions

If any taxpayer who is required to get the tax audit done but fails to do so, the least of the following may be levied as a penalty:

  • 0.5% of the total sales,
  • turnover or gross receipts Rs 1,50,000

However, if there is a reasonable cause of such failure, no penalty shall be levied under section 271B


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CA Rupali Gupta

CA Rupali Gupta