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Regarding Tax audit

22 July 2019

Dear Experts,
I have query regarding applicability of tax audit
Query1
--One of my client(proprietor) having salary income of Rs 7 lakhs and having a business with loss of Rs 10 lakhs and turnover 85 lakhs...
Whether Tax audit is applicable in this case?
Query 2
--Another client (proprietor) does not have salary income only having business with loss of 4 lakh and turnover 92.5 lakhs..
Whether Tax audit is applicable in this case?
P. S both of them are maintaining proper books and records for accounting purposes

Thank you

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5 Replies

rama krishnan (12234 Points)
Replied 22 July 2019

in both cases tax audit is mandatory if they want to declare loss income

yash varshney (Pro) (248 Points)
Replied 22 July 2019

Can you please elaborate the same and where it is written that in case of loss tax audit is mandatory??

Suresh Thiyagarajan (Student) (3986 Points)
Replied 22 July 2019

1. According to sec 44AB tax audit is mandatory if a person's gross receipts or T.O from business exceeds Rs. 1 crore during the year.
2. If he is carrying on profession tax audit will be mandatory if his gross receipts or T.O exceeds Rs. 50 lakhs during the year.
3. In your first case since the T.O is less than Rs. 1 crore tax audit will not be applicable.
4. In your second case also T.O is less than Rs. 1 crore, so tax audit will not be applicable in this case also.
Please correct me if the above solution has an alternative view.

Shweta Gupta (Assistant Manager) (224 Points)
Replied 22 July 2019

till FY 2015-16 tax audit was mandatory if business man is showing profit less then 8 percent of total turnover but now this condition has been removed from FY 16-17. there is no requirement of tax audit if the Turnover is less then 1 crore.

1 Like

khalid (soical work) (222 Points)
Replied 22 July 2019

in case you have mandatory to audit if your income less than 8% of turnover if opt presumptive taxation.
otherwise audit mandatory if turnover excess 1cr.