Tax audit ceiling limit with 44AD

Hey Md Azhar! Here's the clarification on your query about tax audit limits and section 44AD:

1. Turnover Limit under Section 44AD:
   The presumptive taxation scheme under Section 44AD applies up to a turnover of ₹2 crore (increased from ₹1 crore recently). So, businesses with turnover up to ₹2 crore can opt for 44AD presumptive scheme.

2. Tax Audit Applicability under Section 44AB:

   • If your turnover exceeds ₹2 crore, tax audit under Section 44AB(a) is mandatory.

   • If turnover is below or up to ₹2 crore, but you opt out of presumptive scheme and your income exceeds basic exemption limit, tax audit under Section 44AB(e) applies.

3. Regarding Audit Count Limit (Specified Number of Tax Audit Assignments):
   As per the latest ICAI guidelines, audits under sections 44AD, 44AE, 44AF (presumptive tax scheme audits) do NOT count towards the limit of 60 tax audit assignments for a CA.

4. Your Example:

   • Last year turnover: ₹80 lakh (opted 44AD) — no tax audit count.

   • Current year turnover: ₹1.6 crore, opted out of 44AD, net income taxable and turnover below ₹2 crore.

   • So audit will be under Section 44AB(e) (audit when opting out of 44AD but turnover below ₹2 crore and taxable income exceeds basic exemption).

   • This audit will count towards your limit of 60 tax audits.

Summary:

• Turnover limit for 44AD: ₹2 crore

• Audit section depends on turnover and opting out of presumptive scheme.

• Audits under 44AD, 44AE, 44AF do NOT count towards the 60 audit limit.

• Audit under 44AB(e) will count towards the 60 audit assignments.