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Tax audit applicablity

Nidhi Jain (Chartered Accountant) (54 Points)

03 June 2010

Whether tax audit is applicable to the company if current year turnover is Rs. 20 lacs but in previous year Turnover was Rs. 70 lacs so whether in current year tax audit will apply?

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17 Replies

Madhusudan Kabra (knowledge seeker) (1779 Points)
Replied 03 June 2010

carrying on business shall, if his total sales, turnover or
gross receipts, as the case may be, in business exceed or
exceeds forty lakh rupees in any previous year or
carrying on profession shall, if his gross receipts in
profession exceed ten lakh rupees in any previous year; or
carrying on the business shall, if the profits and gains
from the business are deemed to be the profits and gains of
such person under section 44AD or section 44AE or section
44AF, as the case may be, and he has claimed his income to
be lower than the profits or gains so deemed to be the
profits and gains of his business, as the case may be, in
any previous year get his accounts of such previous year
audited by an accountant before the specified date and
furnish by that date the report of such audit in the
prescribed form duly signed and verified by such accountant
and setting forth such particulars as may be prescribed

Regards

Madhusudan Kabra

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CA VINAY BANSAL (In job with KPMG) (289 Points)
Replied 03 June 2010

Tax audit applicable only if the previous year turnover exccedds RS 40L.

For this year, i think the criteria has been changed to 60 lakhs.

Regards

Amir (Learner) (4016 Points)
Replied 03 June 2010

Dear Mam,

Tax audit is applicable only if the turnover in the year in question exceeds the limit. (Unlike TDS provisions where an Individual /HUF are required to deduct TDS in the year FOLLOWING the previous year in which turnover was exceeded)

Hence in the present case the Assesee (being Individual/HUF) is not required to get Tax Audit done but is required to deduct TDS.

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 03 June 2010

Turnover limit for the purpose of tax audit should be seen every year. It is not like if one year there was audit everyyear there will be audit.

So if the turnover does not exceed Rs. 40 lakhs (now Rs. 60 lakhs) last year then you are liable for audit this year.

1 Like

Prity (Partner) (70 Points)
Replied 03 June 2010

Ya......

For Tax Audit, the limit of Rs. 60 lakhs(earlier 40lakhs) in case of business and 15 lakhs(earlier 10lakhs) in case of professional should be seen every year....

If in any year Tax Audit is applicable, and in the next year the limit is not crossed then accounts not required to be audited under section 44AB.

And if in the 3rd year again the limit is crossed then Tax Audit will be applicable.

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CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 03 June 2010

As rightly said by amir ji, tax audit s not applicable since the turnover s only 20L

Madhusudan Kabra (knowledge seeker) (1779 Points)
Replied 03 June 2010

THANX MR . ADITYA FOR UPDATION..........

sandeep (CA IN POWERCOM) (61 Points)
Replied 03 June 2010

agree with aditya mahes..........

(Guest)

agree with mr. aditya

Kumar (Article) (922 Points)
Replied 04 June 2010

Turnover limit for the purpose of tax audit is to seen every year.

So if the turnover does not exceed Rs. 40 lakhs (now Rs. 60 lakhs) for Business and Rs. 10 lakh (now Rs. 15 Lakh) foe profession previous year then you are not liable for tax audit this year.

Take Care..........!!!

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priyanka bathwal (student) (160 Points)
Replied 04 June 2010

yes the limit is now 60 lacs and 15lacs only then audit is required

Rahul Mittal (Student) (33 Points)
Replied 04 June 2010

tax audit N/A

CA.Krishna (c.a.) (162 Points)
Replied 02 July 2010

hi dear , Let me know that if turnover for A.Y.2010-11 is Rs.200000 only in retail trading business and Net profit is less than 8 % than Tax audit is cumpulsory (u/s 44AF or AD whatever) ? Though It is costly for such small business to get a/c audited

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 02 July 2010

Dear Krishna,

You have an option either to show income @ 8% which equals Rs. 16,000/- only or go for tax audit u/s 44AB.

As u mentioned the it is costly for small business to get audited then i would suggest that u should show income of Rs. 16,000 as deemed income for the year u/s 44AD and file the return accordingly.

Moreover so as even if you are in the highest tax bracket as per Income Tax slab rates of 30.9% (including cess) due to income from other heads then the effectively u pay only Rs. 4,944/- as income tax. However if you go for tax audit the moinimum fees a CA would charge would be atleast Rs. 7,500/-. That would be the least. So it is better to show the income as deemed income as it is beneficial though the real income is less than that.