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Tax Audit for FY 2020-2021

26 July 2020

If in the FY 2020-2021, my turnover will be Rs. 4 cr. and net profit be Rs. 33 lakhs and all the sales are in cash, would audit be compulsory for me?

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4 Replies

CA ABHAY GUPTA (Practice) (3235 Points)
Replied 26 July 2020

Yes as per section 44AB(a) you are under tax audit for FY 2020-21..

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annu Goyal (1102 Points)
Replied 26 July 2020

Yes, audit is mandatory under sec44AB of income tax for FY 2020-21

Maryam Hasan Meem (Student) (448 Points)
Replied 27 July 2020

A taxpayer is required to have a Tax Audit carried out if the Sales, Turnover Or Gross Receipts of business EXCEED Rs 1 crore in the financial year.

However, a taxpayer may be required to get their accounts audited in certain other circumstances. We have categorised the various circumstances in the tables mentioned below:

NOTE: 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.

BUSINESS:
1) Carrying on business (not opting for presumptive taxation scheme

2) Carrying on business eligible for presumptive taxation under Section 44AE, 44BB or 44BBB

3) Carrying on business eligible for presumptive taxation under Section 44AD

4) Carrying on the business and is not eligible to claim presumptive taxation under Section 44AD due to opting out for presumptive taxation in any one financial year of the lock-in period i.e. 5 consecutive years from when the presumptive tax scheme was opted

5) Carrying on business which is declaring profits as per presumptive taxation scheme under Section 44AD

PROFESSION

1) Carrying on profession

2) Carrying on the profession eligible for presumptive taxation under Section 44ADA

BUSINESS LOSS

1) In case of loss from carrying on of business and not opting for presumptive taxation scheme

2) If taxpayer’s total income exceeds basic threshold limit but he has incurred a loss from carrying on a business (not opting for presumptive taxation scheme

3) Carrying on business (opting presumptive taxation scheme under section 44AD) and having a business loss but with income below basic threshold limit

4) Carrying on business (presumptive taxation scheme under section 44AD applicable) and having a business loss but with income exceeding basic threshold limit.

* Basic threshold limit is Rs.1 crore .

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Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 27 July 2020

A person is required to have a Tax Audit carried out if the Turnover of business is more 1 crore in the financial year.
But, The threshold limit of 1 crore for a tax audit is 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 turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments.

So, As your all sale is in cash, limit of 5 crore is not applicable to you, so,it's compulsory to carried out tax audit.