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10 Important Points to know about Tax Audit u/s 44AB of Income-Tax Act
Brief on Tax Audit u/s 44AB
1. Every person carrying on Business whose gross turnover or sales from the business exceeds Rs.1 crore in the previous year relevant to the assessment year is required to get his accounts audited before filing tax return for that assessment year.
2. Every person carrying a profession whose gross receipts exceeds Rs.25 lakhs in the previous year relevant to the assessment year is required to get his accounts audited before filing tax return for that assessment year.
3. Tax Audit limit of Profession is always 25% of the limit for business i.e. Tax Audit limit for FY 2012-13 was Rs.60 lakhs for business and Rs.15 lakhs for professionals and now it is Rs.1 crore and Rs.25 lakhs.
4. In case the turnover of business carrying on by trust/association/institution/NGO exceeds Rs.1 crore, even if they are claiming exemptions under sections 10(21), 10(23A), 10(23B) or section 10(23BB) or section 10(23C) or section 11 or deductions under section 80P by cooperative society, are equally required to get their accounts audited.
5. Section 44AB makes no difference between a resident individual and non-resident. Therefore, a non-resident assessee is also required to get his accounts audited which, would be restricted only for his Indian operations since he is chargeable to income-tax in India only in respect of income accruing or arising or received in India and to furnish such report under section 44AB if his turnover/sales/gross receipt exceeds Rs. 1 Crore or Rs. 25 Lacs, as the case may be.
6. A person carrying on business or professions and is covered provisions of section 44AD, 44AE, 44AF, 44BB or 44BBB and he has claimed that his income from the said business is lower than the deemed profits and gains computed under the relevant section, is also required to get his accounts audited before filing tax return.
7. In case a person in carrying more than one business or profession, than total turnover of all of his business or total gross receipts from his all professions shall be clubbed to together to check the threshold limit of tax audit.
8. In case a person is having income from both business and profession then he is liable for tax audit only if any of this income source exceeds the prescribed limit. Thus if sanyam has income from profession Rs.23 lakhs and from business Rs.1.5 crore then he is required to get his accounts of books audited for both business as well as profession. But on the other if neither of his income source exceeds the prescribed limit then he does not fall into the parameter of tax audit.
9. The due date for getting the books of accounts audited and submission of audit reports is mentioned in the table below –
Different tax payers Audit Form No. Statement Particulars Due date for getting books audited Due date for submission of audit report In the case of a person who carries on business or profession and who is required by to get his account audited Form No. 3CA Form No. 3CD September 30 of the assessment year September 30 of the assessment year In the case of a person who carries on a business or profession but not being a person referred to above Form No. 3CB Form No. 3CD September 30 of the assessment year September 30 of the assessment year
10. Penalty for non-compliance of the provisions of section 44AB is Rs.1,50,000 or .5% of the total turnover or receipts, as the case may be.
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