Income Tax Audit Applicability & Application in India
Table of Contents
Myth vs Facts – Decoding Tax Audit u/s 44AB(e):44AD
| Nature of Business or Profession | When audit is Mandatory? |
Business loss |
|
| In case of loss from carrying on of business and not opting for presumptive taxation scheme | Total sales, turnover or gross receipts exceed Rs 1 Crore |
| If taxpayer’s total income exceeds basic threshold limit but he has incurred a loss from carrying on a business (not opting for presumptive taxation scheme) | In case of loss from business when sales, turnover or gross receipts exceed 1 Crore, the taxpayer is subject to tax audit under 44AB |
| Carrying on business (opting presumptive taxation scheme under section 44AD) and having a business loss but with income below basic threshold limit | Tax audit not applicable |
| Carrying on business (presumptive taxation scheme under section 44AD applicable) and having a business loss but with income exceeding basic threshold limit | Declares taxable income that is less than the limitations set by the presumptive tax scheme but more than the basic threshold limit. |
All about Presumptive Taxation Scheme us 44AD, 44ADA and 44AE
Quick Comparison: Statutory Audit vs. Tax Audit
| Aspect | Statutory Audit | Tax Audit |
|---|---|---|
| Governing Act | 📌 Companies Act, 2013 (Sec 139-147) | 📌 Income Tax Act, 1961 (Sec 44AB) |
| Applicability | 📌 Mandatory for all registered companies, irrespective of turnover | 📌 Applicable to Companies, LLPs, Partnership Firms, and Individuals if turnover/professional receipts exceed the prescribed limit |
| Threshold Limit | 📌 No threshold; compulsory for all companies | 📌 Required if Business Turnover/Professional Receipts exceed the threshold (Refer attachment for limits) |
| Purpose | 📌 Ensures fairness, reliability, and transparency in financial statements | 📌 Ensures accurate tax reporting and proper maintenance of books |
| Due Date | 📌 Within 6 months of financial year-end, before AGM | 📌 Due date for filing report: 30th September of the assessment year |
| Consequences of Non-Compliance | 📌 Company Penalty: ₹25,000 – ₹5,00,000 📌 Officers in Default: ₹10,000 – ₹1,00,000 fine OR up to 1-year imprisonment |
📌 Penalty: Lower of 0.5% of turnover or ₹1,50,000 |
We are transparency and financial discipline. Recognition under the Income Tax Bill 2025 will enhance compliance and accountability in financial reporting.
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