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Audit Limit for FY 19-20

21 January 2021

There is some confusion regarding the new 5 Crore limit for Audit. Is it applicable from FY 20-21 or FY-19-20 ? My turnover is below 5 crores and its a proprietorship firm. Am I liable for Audit and also liable to deduct TDS?

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10 Replies

CA Rashmi Gandhi (Chartered Accountant) (86323 Points)
Replied 21 January 2021

The threshold limit of Rs 1 crore for a tax audit is proposed to be increased to Rs 5 crore with effect from AY 2020-21 (FY 2019-20) if the taxpayer’s cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments.

Now if you your cash receipts and payments is less than 5% of overall transaction, then you are not liable to get your books of accounts audited.

Liable to deduct TDS arises if your turnover exceeds RS.1 crore in last financial year

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Rajesh Nahar (NA) (79 Points)
Replied 23 January 2021

Thanks Rashmi. But what if we declared income under sec 44AD in the previous financial years prior to the financial year 19-20? Is the Audit applicable then?

Krishna Chaudhary (Accountant) (4531 Points)
Replied 23 January 2021

From fy 19-20 itself. but it's conditions are very tough to follow.

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CA Rashmi Gandhi (Chartered Accountant) (86323 Points)
Replied 23 January 2021

If you have declared income u/s 44AD and now you want to audit then you can do so. But then you have to get your books audited for 5 years.

In other words you can't opt presumptive scheme u/s 44AD for 5 years

Rajesh Nahar (NA) (79 Points)
Replied 24 January 2021

Thnx Rashmi. But my question is, whether the 5 crore rule for "No Audit required" is applicable for FY 19-20 even if I had opted for 44AD in FY 18-19 and FY 17-18 etc?

I mean does opting for 44AD in previous financial years prevent me from not going for an Audit for FY 19-20 as my turnover is below 5 crores and cash receipts and payments are also below the 5% threshold? Can I skip the Audit?

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CA Rashmi Gandhi (Chartered Accountant) (86323 Points)
Replied 24 January 2021

It is of no matter that you declared income u/s 44AD in earlier years.

If your turnover is below 5 crores & 5% threshold met then you can skip audit .

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Rajesh Nahar (NA) (79 Points)
Replied 25 January 2021

Thanx Rashmi.

When we file the ITR returns without the Audit, is there a separate column in the ITR form that we submit which will indicate that we are filing the returns under the new 5 crore rule?

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