Is Audit Necessary if Cash Payments exceeds 5% of Total Payments & NIL CASH RECEIPTS

This discussion clarifies the necessity of a tax audit when cash payments surpass 5% of total payments, especially if cash receipts are nil. The rules state an audit isn't required for turnovers below certain thresholds if both cash payments and receipts are under 5%. However, if only cash payments exceed the 5% limit, a tax audit may still be mandatory, particularly if the turnover is above ₹1 crore. The query also seeks clarification on whether items like partner remuneration, depreciation, bank fixed deposits, and partner expenses adjusted in capital accounts should be included when calculating the 5% cash payment threshold.