Partnership Firm Audit query

Dear Sir,

My query is regarding partnership firm

- What is the maximum turnover limit for partnership firm for Audit?

- Currently firm turnover is 24Lac and net profit is 45000/- only do audit is mandatory? This is new firm first filing.

- Example - If we haven't file under section 44AD in any previous year and our turnover is 99lakh in FY 2020-21 and profit is 100000 do we need to do audit? Can we show only 1lac profit without doing audit?

- In above question my profit is below 6/8% audit is mandatory or not? If I haven't file under 44AD in any preceding yr? If audit is not mandatory please explain why?

- If we will cross 1cr turnover than only audit will come and below 1cr turnover can we show any profit without having audit?

Please explain above case one by one it will be really help me to understand more and clear. Thanks

Hey Somit! Here’s a clear, step-by-step explanation of your partnership firm audit queries:

1. Maximum turnover limit for mandatory audit for partnership firms

Section 44AB of the Income Tax Act mandates audit if:
- Turnover/gross receipts exceed ₹1 crore in a financial year (for business).
- For professionals, the limit is ₹50 lakh.
So, for a partnership firm engaged in business, audit is mandatory if turnover > ₹1 crore.

2. Firm turnover ₹24 lakh and net profit ₹45,000 — Is audit mandatory?

Since turnover is ₹24 lakh (less than ₹1 crore), audit is NOT mandatory.
Even though profit is ₹45,000, audit depends on turnover or presumptive taxation limits, so no audit needed here.

3. Turnover ₹99 lakh, profit ₹1 lakh in FY 2020-21, no filing under Section 44AD previously — Is audit needed?

Turnover ₹99 lakh < ₹1 crore, so audit not mandatory based on turnover.
If you did NOT opt for presumptive taxation under Section 44AD, audit is not mandatory regardless of profit percentage.
So yes, you can show ₹1 lakh profit without audit.

4. Is audit mandatory if profit is below 6% or 8%, and no filing under 44AD?

Under Section 44AD, if you opt in, and actual profit is less than:
- 6% (for digital transactions) or
- 8% (for non-digital transactions),
then audit is mandatory.
BUT if you did not opt for 44AD, and turnover is below ₹1 crore, then audit is not mandatory even if profit is below 6% or 8%.

5. If turnover crosses ₹1 crore, audit becomes mandatory

Yes, once turnover exceeds ₹1 crore in a year, audit under Section 44AB is mandatory regardless of profit or presumptive scheme.

6. Can profit be shown without audit if turnover is below ₹1 crore?

Yes, if turnover is below ₹1 crore and no presumptive taxation is opted, you can show any profit without audit, as long as the profit is supported by proper books of accounts.