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Increase in Threshold Limit to Rs.5 crore For Tax Audit [ A.Y. 2021-22]

DigitalCA
Mar 03, 2021

 

 

Increase in Threshold Limit to Rs.5 crore For Tax Audit [ A.Y. 2021-22]

Previously, Every person who is carrying on business and maintaining books of account is required to get them audited, if during the previous year its sales, turnover or gross receipt from business exceeds Rs. 1 crore.

Now the new threshold limit is 5 crore, this is done to reduced the burden of compliance on small & medium Enterprises. However, This limit is applicable only if in previous year the receipt & payment in cash doesn’t increase 5% of total receipt & payment.

The applicability of tax audit provisions from Assessment Year  2020-21 are as:

Nature of Business or Profession

Tax payer

Audit is Mandatory, If

Any Professions (Specified or Non-specified)

Any

Gross Receipts from Profession during the relevant previous year exceeds Rs.50 lakhs

 

Business

Both Payment and Receipt in case doesn’t exceed 5% of the Total Receipts and Payments respectively.

Total Sales, Turnover or Gross Receipts from Business during the previous year exceeds Rs. 5 Crore.

 

Either payment or receipt in cash exceeds 5% of the total receipts and payment respectively

Total sales, turnover or gross
receipt from business during the
previous year exceeds Rs. 1 crore

Business eligible for Presumptive Taxation U/S
44AD

Resident Individual or HUF

If income of assessee exceeds the maximum exemption limit and he has opted for the scheme in any of the last 5 previous years but doesn’t opt for the scheme in current year.

Business eligible for Presumptive Taxation U/S
44AD

Resident Partnership Firm

Taxpayer has opted for the scheme in any of the last 5 previous years but doesn’t opt for the scheme in current year.

Profession eligible for Presumptive Taxation U/S
44ADA

Resident Assessee

Taxpayer claims that his profits from profession are lower than the profits computed U/S 44ADA and total income exceeds the maximum exemption limit

Business eligible
for Presumptive
Taxation U/S 44AE

Any Assessee engaged in plying, hiring or leasing of goods carriage

Taxpayer claims that his profits from business are lower than the profit computed U/S 44AE

Business eligible
for Presumptive
Taxation U/S 44BB

Non-resident assessee engaged in exploration of mineral oil

Taxpayer claims that his profits from business are lower than the profit computed U/S 44BB

Business eligible for Presumptive Taxation U/S
44BBB

Foreign Co. engaged in civil construction

Taxpayer claims that his profits from business are lower than the profit computed U/S 44BBB