How to select Materialily Level

There are no thumb rules for selecting materiality limits. Different audit firms follow different basis for calculating materiality limits.
For eg - It is calculated at certain rate on turnover or on fixed assets.

The One says:

Rhea is correct. The One would like to add the factors which go onto determining the materiality level (refer AAS-13)

Nature of Business(turnover, size, transaction, etc), Audit Risk, Sampling Risk, Tolerable Error, Auditors judgement and experience with similar or same entity, Internal Controls, and Regulations (like Companies Act, Income Tax Act)

You can find the exact method of calculating materiality level here

https://youtu.be/pn-AffIpD-4

You can also go through the entire text of SA 320 at www.deepakbora.com which is explained with practical examples under audit for CA Section