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
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
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
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:
---
### Situation:
* Previous year turnover: Above ₹1 crore → Tax audit mandatory.
* Current year turnover: ₹45 lakhs → Will tax audit be required?
---
### 🔍 **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.
---
### 📌 **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.
---
### 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 |
---
### Example:
| Turnover | Declared Profit | Tax Audit Required? |
| --------- | ----------------------- | ------------------- |
| ₹45 lakhs | Profit ≥ 8% of turnover | No |
| ₹45 lakhs | Profit < 8% of turnover | Yes |
---
### Reference:
* **Section 44AB**: Tax audit applicability threshold.
* **Section 44AD(4)**: Mandates tax audit if declared profits are less than 8% of turnover.
---
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?
---
### Situation:
* Previous year turnover: Above ₹1 crore → Tax audit mandatory.
* Current year turnover: ₹45 lakhs → Will tax audit be required?
---
### 🔍 **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.
---
### 📌 **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.
---
### 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 |
---
### Example:
| Turnover | Declared Profit | Tax Audit Required? |
| --------- | ----------------------- | ------------------- |
| ₹45 lakhs | Profit ≥ 8% of turnover | No |
| ₹45 lakhs | Profit < 8% of turnover | Yes |
---
### Reference:
* **Section 44AB**: Tax audit applicability threshold.
* **Section 44AD(4)**: Mandates tax audit if declared profits are less than 8% of turnover.
---
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?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Depreciation Chart Companies Act
- GST Audit whether Govt Companies are exempt?
- PTRC Show Cause Notice on Email
- Accounting treatment of AMC alongwith the purchase of Laptop
- Unable to File TDS Q2 Return – New TRACES Portal Error
- Capital Gail Exemption Certificate
- Taxation of crypto futures in India Fy 2026- 2027
- Transfer of Physical Stock Between Two Proprietorship Concerns
- EPF ECR NEW RULES Sep 17th 2026
- Issuing of delivery challan by seller of goods
- GST Treatment of Purchases with GST Paid where Outward Supplies of Manufactured CattleFeed Exempt
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
