Income tax Audit for FY 2020-21

A Taxpayer is having Turnover of Rs 2.5 crores and his net profit is 3% of sales  and more than 95% transactions of receipts and payment are through bannking channel. 

The understanding of Taxpayer is as under. 

(1)Since Turnover is less than Rs 10 Crores and more than 95% transactions of receipts and payment are through bannking channel , Income Audit is not required. 

(2) Also Audit is not required even profit is 3% i.e.  is less than 8% becuase requirement of 8% is for presumptive scheme. u/s 44AD and section 44AD is applicable upto Turnover of Rs 2 crores. Here section 44AD is not applicable because Turnover is more than Rs 2 crores .

In both above cases Income Tax Audit is not require. Kindly confirm. 

 

Replies (3)
Quick Summary
This discussion clarifies whether an income tax audit is required for the financial year 2020-21 for a business with a turnover of Rs 2.5 crores and a 3% net profit, where over 95% of transactions are via banking channels. The consensus is that an audit is not required in this scenario, even with a profit below the 8% threshold often associated with presumptive taxation schemes. The applicability of Section 44AD is also discussed, confirming it's not relevant due to the turnover exceeding Rs 2 crores.

Yes it is right, audit is not required. For more information check your inbox

Thank you for your reply. Audit is not required and no need to report profit of 8% . i.e. profit of less than 8% is acceptable .  please confirm . 

Conditions of tax audit in the following cases:
1. Sec 44AD does not specify that.
His nature of business must be specified.

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