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Tax Audit for MSME

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VijNat

owner

24 Points Posted on 30 July 2023

Dear Experts,

Tax payer is a proprietor and having TO ov 3.5cr in FY22-23.

He has interest income from FD.

He had opted for presumptive taxation in FY21-22.

Since, his TO is >2cr in the FY22-23, he is not eligible for continuation in presumptive. He now will have to file the return on regular basis.

But his profit as per the books will come to about 7L (after having considered all the business expenses), which will be about 2.5% of profit from his total TO of 3.5Cr in FY22-23.

Does he have to go for Audit since his profit is <6% of TO? or he can file the return on his own by declaring profit as 7L..?

Thanks in advance.

Kartik

Replies (2)

Quick Summary

A proprietor with a turnover exceeding £3.5 crore in FY22-23 is no longer eligible for presumptive taxation due to exceeding the £2 crore threshold. While their book profit is £7 lakh (2.5% of turnover), the key question is whether a tax audit is mandatory. Generally, an audit is required if turnover exceeds £1 crore, with exceptions for cash transactions or digital payments. MSME status does not alter these audit thresholds.

sabyasachi mukherjee

Profession

19978 Points Posted on 30 July 2023

Tax audit for msme will bit tedious.

Aashok Kumar Sharma

Finance/Compliance Consultant

75651 Points Posted on 08 November 2026

Proprietor with Rs 3.5 crore turnover:
• Tax audit is required if turnover exceeds Rs 1 crore, unless cash receipts and payments are each 5% or less (then the limit is Rs 10 crore). If digital, no audit at Rs 3.5 crore.
• 44AD isn't available (above Rs 2 crore / Rs 3 crore).
• Interest income from FDs is Other Sources, not turnover.
• MSME status doesn't affect the audit threshold.