Applicability of income tax audit for 55 lakh turnover?

smalll firm 1 --> businessman sells goods having turnover for fy2021 just rs.55 lakhs, no cash transactions, other income (like interest income 10 lakhs), net profit margin 4% only on turnver (excluding other income). 

my view --> tax audit is applicable because less than 6% profit margin.

experts view if any? ..

big firm 1 --> however, same facts, but turnover 6 crores, then no tax audit.  so big entities can show less margin yet no tax audit for them. looks strange..?

 

Replies (3)
Quick Summary
This discussion explores whether an income tax audit is applicable for a business with a turnover of £5.5 million and a net profit margin of 4%. The core question revolves around the 6% profit margin threshold often associated with tax audit applicability under Section 44AD of the Income Tax Act. Participants debate whether a lower profit margin necessitates an audit, even for businesses with significant turnover, and compare this to scenarios with larger turnovers where tax audit might not be required.

For both if margin is below 6% tax audit is applicable.
Audit is applicable if profit is less than 6%

i think for entitties above rs. 2 crore turnover, (say  3 crore), then 6% margin 44ad is not applicable, hence, no tax audit as less than 10 crore

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