Tax audit u/s 44ab

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 March 2015 Sir,

Previously my turnover was above Rs. crore and was subject to tax audit. This year my turnover is 45 lac. Whether I will have to tax audit report or not. Explain with provision of Act
Regards

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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05 March 2015 for fy 14-15 your turnover is 45 lakhs assuming to be business entity as per sec 44AB no tax audit is applicable as the limit is 1 crore.

Querist : Anonymous

Querist : Anonymous (Querist)

07 September 2015 Also refer to Section 44AD. If the profit from business is less 8% of turnover, Tax Audit will have to be done

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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26 July 2025 Here’s a clear explanation for your query on **tax audit applicability under Section 44AB** when turnover has dropped below the threshold:

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### Situation:

* Previous year turnover: Above ₹1 crore → Tax audit mandatory.
* Current year turnover: ₹45 lakhs → Will tax audit be required?

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### 🔍 **Tax Audit Limit under Section 44AB (FY 2014-15 onwards):**

* For **business entities**, tax audit is **mandatory if turnover/gross receipts exceed ₹1 crore** (₹10 crore if digital transactions > 95%).
* Since your turnover this year is **₹45 lakhs (less than ₹1 crore)**, tax audit is **NOT mandatory** just based on turnover.

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### 📌 **Exception - Section 44AD (Presumptive Taxation Scheme):**

* If you have opted for presumptive taxation under **Section 44AD**, where income is presumed at 8% (6% if digital receipts > 95%) of turnover, then:

* **If your declared profit is less than 8% of turnover, tax audit is mandatory even if turnover is below ₹1 crore.**

* This is to ensure income is not underreported.

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### Summary Table:

| Condition | Tax Audit Applicability |
| ------------------------------------------------------------------------------------ | ----------------------- |
| Turnover less than ₹1 crore (normal business) | No tax audit required |
| Turnover less than ₹1 crore under Section 44AD with declared profit < 8% of turnover | Tax audit required |

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### Example:

| Turnover | Declared Profit | Tax Audit Required? |
| --------- | ----------------------- | ------------------- |
| ₹45 lakhs | Profit ≥ 8% of turnover | No |
| ₹45 lakhs | Profit < 8% of turnover | Yes |

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### Reference:

* **Section 44AB**: Tax audit applicability threshold.
* **Section 44AD(4)**: Mandates tax audit if declared profits are less than 8% of turnover.

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If you want, I can help you check your presumptive income calculations or draft a checklist for tax audit applicability based on your turnover and profit. Need that?

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