COMPULSORY AUDIT OF ACCOUNTS UNDER INCOME TAX ACT,1961 [SECTION 44AB]

1]. Every person carrying on business shall, if his total sales, turnover or gross receipts in business exceeds INR 1 crores in any previous year, get his accounts of such previous year audited by a Chartered Accountant on or 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.

The threshold limit of tax audit increased from INR 1 Crore to INR 10 Crore by CBDT in case of a person carrying on the business subject to certain conditions being satisfied as mentioned below:

2]. In order to reduce the compliance burden on small and medium enterprises, CBDT has increased the threshold limit of a person carrying on business from INR  1 Crore to INR 10  Crore in cases where:-

a. Aggregate of all amounts received including the amount received for sales, turnover, or gross receipts during the previous year, in cash does not exceed 5% of the said amount.

b. Aggregate of all payments made including the amount incurred for expenditure, in cash, during the previous year does not exceed 5% of the said payment.

For this clause, the payment or receipt, as the case may be, by a cheque drawn on a bank or by a bank draft, which does not account payee, shall be considered as payment or receipt, as the case may be, in cash.

2]. In the case of a person carrying on profession, the provision for compulsory audit is applicable if his gross receipts in profession exceed INR 50,00,000 (INR 25,00,000 up to P.Y. 2015-16) in any previous year.

3]. Where a person who is carrying is carrying on the business and is covered under the section 44AE, 44BB, or 44BBB and claims that his income from the said business is lower than the deemed profit and gains computed under the said relevant section, in such case also Tax Audit under Income-tax Act is compulsory.

4]. Where a person who is carrying on a profession referred to in section 44DA and claims that:

(i) Income from such profession is lower than 50% of the gross receipt of the profession;

(ii) His income exceeds the maximum amount which is not chargeable to income tax in any previous year.

 He shall get his accounts of such previous year audited by a chartered accountant on or before the due date for filing of a tax audit.

Provided that this section shall not apply to the person, who declares profits and gains for the previous year by the provisions of section 44AD(1) and his total sales, turnover, or gross receipts, as the case may be, in business does not exceed INR 2 Crore in such previous year.

5]. Specified date about accounts of the assessee of the previous year relevant to an assessment year, means the due date of furnishing the return of income under section 139(1).

(i) 30^th November of the relevant assessment year in case the assessee has undertaken any international transaction as per Section 92B or specified domestic transaction as per newly inserted section 92BA.

(ii) 30^th September of the relevant assessment year in case of any other assessee.

It may be noted that the assessee is required not only to get his account audited by the specified date but also to furnish the audit report on or before the specified date, irrespective of the fact whether the return of the income is filed by that date or not.

Due date of furnishing the tax audit report changed

To enable pre-filing of returns in case of a person having income from business or profession, it is required that the tax audit report may be furnished by the said assessee at least 1 month before the due date of filing of Income Tax Return.