Audit Applicability

canikhil

Well-Known Member
#1
I often receive queries on the applicability of audit under different circumstances.

Now, that non-tax audit returns are almost done, I thought it would be best to share a few clarifications on when and why tax audit will apply to a particular case.

Please note that the note below is specifically for business cases. Anyone involved in any profession may kindly ignore this post.

1. If you are maintaining books of accounts:

In case you are maintaining books of accounts, then audit will apply to you only if your turnover crosses Rs 1 cr.

2. If you are not maintaining books of accounts:


Audit will apply only if:

a) your profit is less than 6% of the turnover (8% in case of cash turnover); and

b) your taxable income after providing for inter-head set off of losses is more than the exempted limit.

So what does the above means:

a) in case you do not maintain books of accounts and you do not have salary income or have salary income less than 2.5 lakhs, there is no need for an audit;

b) in case your turnover is above 2 cr, mandatory audit regardless of profit or loss

c) in case you have been maintaining books of accounts and do not use 44AD, then audit will apply at turnover in excess of Rs 1 cr

Additional Note: starting Fy 2016-17 (AY 2017-18) In case you decide to go for presumptive taxation under 44AD, then you cannot change this option for next 5 assessment year.
 

headstrong007

----- Full-Time ----- Day-Trader
#2
Thank u, very informative post.
Please, also give the details of all types of inter-head set off of losses possible with f&o trading...
 
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