Quick Summary
Under section 44AB of the Act, every person carrying on business is required to get his accounts audited, if his total sales, turnover or gross receipts, in business exceed or exceeds one crore rupees in any previous year. In case of a person carrying on profession he is required to get his accounts
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FAQ :
Previously, businesses with total sales, turnover, or gross receipts exceeding £1 crore in a previous year were required to get their accounts audited.
The Finance Act 2020 increased the tax audit threshold from £1 crore to £5 crore for businesses where cash transactions (both receipts and payments) did not exceed 5% of the total.
The Union Budget 2021 proposes to increase the tax audit threshold from £5 crore to £10 crore for businesses that meet the criteria of having less than 5% cash transactions.
The increased limit of £10 crore applies if the aggregate of all cash receipts during the previous year does not exceed 5% of such receipts, and the aggregate of all cash payments does not exceed 5% of such payments.
This amendment will take effect from 1st April 2021 and will apply for the assessment year 2021-22 and subsequent assessment years.
The purpose is to reduce the compliance burden on small and medium enterprises and to incentivise non-cash transactions, thereby promoting a digital economy.
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