As Per Section 44AB of the Income Tax Act 1961, Every person carrying on the business & maintaining books of account are required to get their books Audited from a Chartered Accountant if the Gross receipt or Turnover from business during the previous year exceeds Rs. 1 crore (Tax Audit limit is Rs. 2 Crore in case of Presumptive Taxation u/s 44AD).
In case of Profession, books of account are required to get audited, if the Gross receipt or Turnover during the previous year exceeds Rs. 50 Lakh.
In Budget 2020, Section 44AB was amended and the threshold limit was increased from Rs.1 Crore to Rs. 5 Crore in order to ease the compliance for taxpayer & to boost non-cash transactions, subject to the condition that:
- The Aggregate of all Cash receipts during the relevant previous year does not exceed 5% of total receipt.
- The Aggregate of all Cash payments during the relevant previous year does not exceed 5% of total payment
In other words, more than 95% of the business transactions (both receipts & payments) shall be done through banking channels.
From A.Y 2022-23, The Ministry of Finance has increased the threshold limit from, Rs. 5 Crore to Rs. 10 Crore in order to ease the compliance for taxpayer & to boost non-cash transactions.
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