Audit Compulsory or not For Partnership Firm

Quick Summary
Discussion on whether tax audit is compulsory for partnership firms under different conditions. Key factors include turnover limit (1 crore), presumptive taxation u/s 44AD, 8% profit declaration, maintenance of books u/s 44AA, and conditions triggering audit u/s 44AB.

To summarise all discussions, it seems that there is no cut wording in income tax provisions if turnover doesn't exceed tax audit limit then no need to go for compulsory presumptive taxation and (Also considering points of Ankitbhai ).

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.

Partnership firm?

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

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
08 October 2026
SALES TELECALLER

HIRE NOVA

Lucknow

Graduate (Any)

View Details
Company
19 October 2026
Accountant

Jari Saree Center

New Delhi

Others

View Details
Company
26 September 2026
Chartered Accountant

pushpganga ventures

Pune

CA

View Details
Company
ARTICLESHIP 07 October 2026
Article assistant

S.K.Bajpai & Co.

Noida

B.Com

View Details
Company
30 September 2026
Senior Accounts Executive

Codeboard Technology

Chennai

MBA

View Details
Company
ARTICLESHIP 01 October 2026
Articled Assistant

KPSN & Associates LLP

Chennai

CA Inter

View Details
Company
Featured 03 October 2026
Accountant

A P Lodha and Associates

Jalna

B.Com

View Details
Company
14 October 2026
Asst. Manager/Dy Manager (Costing)

manufacturing

Pune

CMA

View Details