Applicability of Tax Audit U/s 44AB
Tax audit is an examination or review of accounts of any business or profession carried out by taxpayers from an income tax viewpoint. It makes the process of income computation for filing of return of income easier
In a case where a person carries business
The section 44AB(a) says that the person carrying business, would required to get his accounts audited if his Total sales/turnover/gross receipts exceeds Rs. 1 crore in the previous year.
However, that this section shall not be applicable to the person who declares profit under Section 44AD and has the total sales/turnover/gross receipts less than Rs. 2 crore.
So now the question arises that when a person is required to get his accounts audited. The answer to this question is as under.
- First of all, the person having the Turnover less than 1 crore is not required to get his accounts audit.
- Secondly, if the turnover exceeds the limit of Rs.1 crore but up to Rs. 2 crore is having an option to avail the benefit of Section 44AD (1) and avoid the audit, if he don’t want to avail the option of Section 44AD (1), then he required to get his accounts audited.
- Thirdly, the person having the Turnover more than Rs.2 crore is required to get his accounts audited.
In a case where a person carries profession
The section 44AB(b) says that where a person carries profession is required to get his accounts audited if the gross receipts in the previous year exceeds Rs. 50 lakhs.
The section 44AB (d) says that where a person carries profession, declares profit U/S 44ADA, and declares the profit less than the deemed profit and his total income exceeds the limit which is not chargeable to tax, then he requires to get his accounts audited U/s 44AB (d).
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