Turnover Limits under Section 44AB: Tax Audit Applicability Simplified

💼 What is Section 44AB?
🧮 Section 44AB of the Income Tax Act, 1961 mandates that certain taxpayers must get their accounts audited if their turnover/gross receipts exceed specified limits.

📈 For Businessmen (Non-Companies)
📌 If business turnover exceeds ₹1 crore, tax audit is compulsory
📌 But if you opt for Presumptive Taxation Scheme (Section 44AD), tax audit isn't required until turnover crosses ₹2 crore

🏦 For Digital-First Businesses
📌 If your total cash receipts and cash payments are within 5%, the tax audit limit increases to ₹10 crore
📌 This helps reduce compliance burden for those using digital modes

👨‍⚕️ For Professionals (Doctors, Architects, Lawyers etc.)
📌 If your gross professional receipts exceed ₹50 lakh, tax audit becomes mandatory

📉 Declaring Lower Income under Presumptive Scheme?
📌 If you opt out of 44AD or 44ADA and show lower income than deemed, and your income is above the basic exemption limit, you will have to get your accounts audited under Section 44AB(e)

⚖️ Due Date to File Audit Report (Form 3CA/3CB + 3CD)
📌 Generally, 30th September (for those not required to file transfer pricing report)
📌 If international transactions are involved, the due date is 31st October

🚫 Penalty for Non-Compliance (Section 271B)
📌 Minimum: 0.5% of total sales/turnover/gross receipts
📌 Maximum: ₹1,50,000
📌 Penalty can be avoided if reasonable cause for failure is demonstrated

❓ FAQs – Frequently Asked Questions

❓ What is the audit limit for digital businesses in FY 2023-24?
✅ ₹10 crore, if cash transactions are less than 5%

❓ What is the audit limit for professionals?
✅ ₹50 lakh in gross receipts

❓ If I declare lower profits under Section 44AD, do I need audit?
✅ Yes, if your income exceeds the basic exemption limit

❓ Can salaried individuals be audited under Section 44AB?
✅ No, Section 44AB is not applicable to salaried individuals

🗣️ From My Desk:

At Prachi Gupta & Associates, we often see MSMEs and professionals confused about audit thresholds. If you're doing a lot of cashless business—great news—you might not need a tax audit even if your turnover hits ₹9.5 crore. But if you’re unsure, it’s always better to consult than to pay a penalty later. Compliance is peace of mind. Let’s stay ahead—together.

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