Audit Compulsory or not For Partnership Firm

1. FIRST to consider, whether the assessee opts for -to declare his income under presemptive basis (44AD), If opted,  then the minimum 8% income of the Turnover to be declared. The tax audit report is compulsory if the income shown is below 8%, only , reitrerating , only when the asesee opted to declare his income u.s.44AD.

2. Second Senario, If the assessee does not opts for u/s. 44AD( Presumptive Basis) and the T.O. is also below 1 crore, he need not gets his books audited u/s. 44AB but nevertheless since in the above case, the T.O. is above 10 Lakhs, he has to maintain the books of accounts u.s. 44AA only , no concern for the declaration of below 8%.

Income Tax Return Audit For Proprietorship Firms is mandatory for the propreitor and companies to file the income tax return above the limit of 5 lakhs income.

Dear All,

A Partership firm with a turnover <1 Crore:

a) Filed return under presumptive profit scheme for the 4 consecutive years.

b) Now, in 5th year would like to opt out of presumptive profit scheme. Turnover is <1Cr. Maintaining books of accounts and showing profits <8%.

As explained by CA Aakarsh Jain, In 5th Year,  Complusary audit applicable.

From 6th Year, Is compulsory audit applicable..?

Please advise. 

Partnership firm is required to undergo a tax audit if its sales, turnover, or gross receipts exceed Rs. 1 crore in a financial year. 

If a taxpayer is required to undergo a tax audit but fails to do so, the penalty can be the lower of the following:

0.5% of the total sales, turnover, or gross receipts

OR

Rs 1,50,000