Tax Audit in India (FY 2024-25 & 2025-26)

A tax audit is a detailed examination of a taxpayer’s financial records to ensure compliance with the Income Tax Act, 1961. As per Section 44AB, certain businesses and professionals must undergo a tax audit if their turnover or receipts exceed specified limits.

Who Needs to Get a Tax Audit Done?

Who Needs to Get a Tax Audit Done?

1.Businesses

A tax audit is mandatory if:

• Total sales, turnover, or gross receipts exceed ₹1 crore in a financial year.

• However, if cash transactions (receipts + payments) are limited to 5% of total transactions, the tax audit limit increases to ₹10 crores.

2.Professionals

A tax audit is required if gross receipts exceed ₹50 lakhs in a financial year.

3. Presumptive Taxation Cases

Taxpayers opting for the presumptive taxation scheme under Sections 44AD, 44ADA, and 44AE must undergo a tax audit if they declare income below the prescribed limits:

• Section 44AD (Businesses): If turnover is below ₹2 crores and the taxpayer declares income lower than 8% (or 6% for digital transactions), a tax audit is required.

• Section 44ADA (Professionals): If a professional declares income lower than 50% of gross receipts, a tax audit is necessary.

• Section 44AE (Transporters): If a transporter (owning up to 10 vehicles) declares income lower than the minimum prescribed, a tax audit is required.

Due Date for Filing Tax Audit Reports

• 30th September of the assessment year for most businesses and professionals.

• 31st October if a transfer pricing audit (under Section 92E) is also applicable.

Penalty for Not Conducting a Tax Audit

Failure to comply with tax audit requirements may result in penalties under Section 271B:

• 0.5% of turnover/gross receipts, subject to a maximum of Rs. 1,50,00

  For expert tax audit assistance, feel free to contact Clearline Chartered Professional Accountant.