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A tax audit is the process of verification and inspection of the accounts of a taxpayer to confirm their adherence to the provisions of the Income Tax law. Section 44AB of the Income Tax Act, 1961 deals with the Audit of the Accounts of a certain category of persons carrying on a business or engaged in a profession.
Tax Audit Limit
The provisions relating to tax audit are provided under Section 44AB of the Income Tax Act. According to Section 44AB, a tax audit is required for the following persons:
Business : In case of a business, tax audit would be required if the total sales turnover or gross receipts in the business exceeds Rs.1 crore in any previous year .
Profession : In case of a profession or professional, tax audit would be required if gross receipts in the profession exceed Rs.50 lakhs during the financial year. A profession or professional could be any of the following as per Rule 6F of the Income Tax Rules, 1962:
Film Artist – Actor, Cameraman, Director, Music Director, Editor, and so on
Legal Professional – Advocate or Lawyer
Medical Professional – Doctor, Physiotherapist, or Nursing and Paramedical Staff
Technical Consultant .
Penalty of non filing or delay in filing tax audit report
If any taxpayer fails to get the tax audit done is punished with the following penalty:
0.5% of the total sales, turnover or gross receipts