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44AB threshold limit.

Sam Ubez (15 Points)

24 November 2021

Can anybody explain me in simple language that what is the threshold limit of audit...is that 1cr, 5cr or 10cr?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (179969 Points)
Replied 25 November 2021

Every person –

(a) carrying on business shall, if his total sales, turnover or gross receipts, in business exceed or exceeds

> one crore rupees in any previous year ..................... (when cash transaction is more than 95%)

In Budget 2020, Section 44AB was amended and the threshold limit was increased from Rs.1 Crore to Rs. 5 Crore in order to ease the compliance for taxpayer & to boost non-cash transactions, subject to the condition that:

The Aggregate of all Cash receipts during the relevant previous year does not exceed 5% of total receipt.
The Aggregate of all Cash payments during the relevant previous year does not exceed 5% of total payment

In other words, more than 95% of the business transactions (both receipts & payments) shall be done through banking channels.

From A.Y 2022-23, The Ministry of Finance has increased the threshold limit from, Rs. 5 Crore to Rs. 10 Crore in order to ease the compliance for taxpayer & to boost non-cash transactions.

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