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Tax Audit

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:

  1. Architect

  2. Accountant

  3. Authorised representative

  4. Engineer

  5. Film Artist – Actor, Cameraman, Director, Music Director, Editor, and so on

  6. Interior Decorator

  7. Legal Professional – Advocate or Lawyer

  8. Medical Professional – Doctor, Physiotherapist, or Nursing and Paramedical Staff

  9. 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

  • Rs 1,50,000

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