Income tax Audit for FY 2020-21

A Taxpayer is having Turnover of Rs 2.5 crores and his net profit is 3% of sales  and more than 95% transactions of receipts and payment are through bannking channel. 

The understanding of Taxpayer is as under. 

(1)Since Turnover is less than Rs 10 Crores and more than 95% transactions of receipts and payment are through bannking channel , Income Audit is not required. 

(2) Also Audit is not required even profit is 3% i.e.  is less than 8% becuase requirement of 8% is for presumptive scheme. u/s 44AD and section 44AD is applicable upto Turnover of Rs 2 crores. Here section 44AD is not applicable because Turnover is more than Rs 2 crores .

In both above cases Income Tax Audit is not require. Kindly confirm. 

 

Replies (3)
Quick Summary
This discussion clarifies whether an income tax audit is required for the financial year 2020-21 for a business with a turnover of Rs 2.5 crores and a 3% net profit, where over 95% of transactions are via banking channels. The consensus is that an audit is not required in this scenario, even with a profit below the 8% threshold often associated with presumptive taxation schemes. The applicability of Section 44AD is also discussed, confirming it's not relevant due to the turnover exceeding Rs 2 crores.

Yes it is right, audit is not required. For more information check your inbox

Thank you for your reply. Audit is not required and no need to report profit of 8% . i.e. profit of less than 8% is acceptable .  please confirm . 

Conditions of tax audit in the following cases:
1. Sec 44AD does not specify that.
His nature of business must be specified.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
12 October 2026
AUDIT , ACCOUNTS AND TAXATION

KDSS

New Delhi

B.Com

View Details
Company
08 October 2026
Accounts and Tax Associate

POOJA R TELI & CO

Pune

CA Inter

View Details
Company
12 October 2026
Finance

I-Genext Consulting Private Limited

New Delhi

CA

View Details
Company
ARTICLESHIP 23 October 2026
Articled Trainee

J Y & CO

Hyderabad

CA Inter

View Details
Company
06 October 2026
Assistant Manager - Audit and Compliance

Ravi K Jain & Co

Noida

Others

View Details
Company
Featured 27 October 2026
semi-qualified CA

Saini Pati Shah & Co LLP, Chartered Accountants

Mumbai

CA Final

View Details
Company
14 October 2026
Accountant

Rize.farm

Bengaluru

B.Com

View Details
Company
ARTICLESHIP 22 October 2026
Articleship intern

Srinath Manikanta

Hyderabad

CA Inter

View Details