Tax audit is mandatory or not
This query is : Resolved
22 July 2016
Individual is a retired doctor from govt. starting practice f.y 2015-16 showing gross receipts 40200
during the year and showing loss 120467 after incurred expenses. he have other income
pension rs. 600000
interest on FD 455678
please advise
22 July 2016
Tax audit is not mandatory since gross receipts from profession is less than Rs. 25 lakhs.
22 July 2016
assessee can claim loss without tax audit
26 July 2025
In the case you've mentioned — a **retired doctor** with **gross professional receipts of ₹40,200**, a **loss of ₹1,20,467**, and **other income** (pension ₹6,00,000 + FD interest ₹4,55,678):
---
### ✅ **Is Tax Audit Mandatory?**
**No**, tax audit is **not mandatory** under Section **44AB** of the Income Tax Act because:
* **Gross receipts from profession** are only ₹40,200 — well **below the ₹25 lakh threshold** for professionals.
* Even though a **loss** is claimed, tax audit under **Section 44AB read with Section 44ADA** becomes relevant only if:
* You declare **less than 50% profit** of gross receipts **and**
* **Gross receipts exceed ₹50 lakhs** (as per 44ADA)
* OR you're **opting out of presumptive taxation** (for businesses under 44AD) and total income **exceeds the basic exemption limit**.
In your case:
* The profession is **below threshold**
* Other income does not trigger audit under 44AD/ADA
* **No audit is required**, even if there's a loss.
---
### ✅ **Can Loss Be Claimed Without Audit?**
Yes, **loss from profession can be claimed without tax audit** in this case because:
* The profession is not covered under presumptive taxation (as gross receipts are very low).
* The individual is maintaining **normal books of accounts** and filing return under the correct ITR form.
* There's **no mandatory audit requirement under Section 44AB**, so the loss is allowed.
---
### 📌 **Key Section Reference:**
* **Section 44AB** – Tax Audit thresholds
* **Section 44ADA** – Presumptive taxation for professionals
* **Section 139(1) + 80** – Loss can be carried forward only if return is filed **within due date** (for carry forward purposes)
---
### 📌 Suggestion:
Ensure the ITR is filed **before the due date** (usually **31st July**) to **carry forward** the loss, if applicable.
Let me know if you want help selecting the right ITR form or preparing the return!
---
### ✅ **Is Tax Audit Mandatory?**
**No**, tax audit is **not mandatory** under Section **44AB** of the Income Tax Act because:
* **Gross receipts from profession** are only ₹40,200 — well **below the ₹25 lakh threshold** for professionals.
* Even though a **loss** is claimed, tax audit under **Section 44AB read with Section 44ADA** becomes relevant only if:
* You declare **less than 50% profit** of gross receipts **and**
* **Gross receipts exceed ₹50 lakhs** (as per 44ADA)
* OR you're **opting out of presumptive taxation** (for businesses under 44AD) and total income **exceeds the basic exemption limit**.
In your case:
* The profession is **below threshold**
* Other income does not trigger audit under 44AD/ADA
* **No audit is required**, even if there's a loss.
---
### ✅ **Can Loss Be Claimed Without Audit?**
Yes, **loss from profession can be claimed without tax audit** in this case because:
* The profession is not covered under presumptive taxation (as gross receipts are very low).
* The individual is maintaining **normal books of accounts** and filing return under the correct ITR form.
* There's **no mandatory audit requirement under Section 44AB**, so the loss is allowed.
---
### 📌 **Key Section Reference:**
* **Section 44AB** – Tax Audit thresholds
* **Section 44ADA** – Presumptive taxation for professionals
* **Section 139(1) + 80** – Loss can be carried forward only if return is filed **within due date** (for carry forward purposes)
---
### 📌 Suggestion:
Ensure the ITR is filed **before the due date** (usually **31st July**) to **carry forward** the loss, if applicable.
Let me know if you want help selecting the right ITR form or preparing the return!
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