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February 25, 2025 / Audit

Income Tax Audit Applicability & Application in India

Table of Contents

  • Myth vs Facts – Decoding Tax Audit u/s 44AB(e):44AD 
    • Business loss
  • All about Presumptive Taxation Scheme us 44AD, 44ADA and 44AE
    • Quick Comparison: Statutory Audit vs. Tax Audit

Myth vs Facts – Decoding Tax Audit u/s 44AB(e):44AD 

Tax Audit 1.

Tax audit 2.

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

Presumptive Taxation Scheme u s 44AD, 44ADA and 44AE 2

Presumptive Taxation Scheme u s 44AD, 44ADA and 44AE 3

Quick Comparison: Statutory Audit vs. Tax Audit

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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The information / articles & any relies to the comments on this blog are provided purely for informational and educational purposes only & are purely based on my understanding / knowledge. They do noy constitute legal advice or legal opinions. The information / articles and any replies to the comments are intended but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as a legal advice or an indication of future results. Therefore, i can not take any responsibility for the results or consequences of any attempt to use or adopt any of the information presented on this blog. You are advised not to act or rely on any information / articles contained without first seeking the advice of a practicing professional.

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