Section 44AB of Income Tax Act – Tax Audit Simplified

As a practicing CA, I often get this question:
"Do I need a tax audit under Section 44AB?"
Let’s make it crystal clear today 💡

🧾 What is Section 44AB?

🔍 Section 44AB deals with Tax Audit – a process where the accounts of certain taxpayers are examined by a Chartered Accountant
📜 It ensures the correctness of income, claims, and deductions filed in the ITR
📈 Applicable to certain categories based on turnover, profession, or presumptive income schemes

💼 Who Needs a Tax Audit under 44AB?

For Businesses:

💰 If total sales, turnover, or gross receipts exceed ₹1 crore in a year – Tax Audit is mandatory
📈 But if your cash transactions (both receipts and payments) are limited to 5% each of total receipts and payments – the limit goes up to ₹10 crore

For Professionals:

📚 If gross receipts exceed ₹50 lakh in a year – Tax Audit is mandatory

📊 Presumptive Taxation Cases (Sections 44AD, 44ADA, 44AE)

Under Section 44AD – For Small Businesses

🧾 If you declare profits below 8% (or 6% in digital mode) of turnover AND total income exceeds basic exemption limit – Tax Audit is compulsory

Under Section 44ADA – For Professionals

📉 If you declare profits less than 50% of gross receipts AND your income exceeds the basic exemption limit – you need Tax Audit

Under Section 44AE – For Transporters

🚚 If you declare lower income than prescribed under 44AE – Tax Audit applies

📅 Due Dates to Remember

📌 30th September of the assessment year is the last date to file the Tax Audit Report in Form 3CA/3CB + 3CD

⚠️ Penalty for Non-Compliance

❌ Minimum ₹1,50,000 or 0.5% of turnover/gross receipts, whichever is lower
✔️ Penalty may be waived if there’s a reasonable cause like natural disaster, death, or system failure

🧷 From My Desk – Prachi Gupta & Associates

We often see clients missing tax audit requirements simply because of a lack of clarity 🧠
Let’s bridge this gap, one post at a time 🙌
Whether you're a trader, consultant, or a freelancer – knowing your audit liability saves you from trouble later 💼

💬 Need help understanding your eligibility or filing your audit?
Let’s connect 💻

🌐 www.prachiguptaassociates.com
📧 contact@prachiguptaassociates.com

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