Tax Audit

Under Section 44AB of the Income Tax Act, 1961, persons involved in certain professions or exceeding a certain amount in business have to get their account books audited by a chartered accountant is known as Tax Audit.

Audit refers to inspection or scrutiny of accounts, in order to ensure compliance with the Income Tax Act and other related laws, and to check fraudulent practices.

Person covered under Tax Audit are:

• A business person whose gross receipts/turnover/sales for the previous financial year is more than Rs. 1 crore. It is now no longer relevant to the person, who opts for presumptive taxation scheme beneath segment 44AD his general income or turnover would not exceed Rs. 2 crores.
• A professional whose gross receipts for the previous financial year is more than Rs. 50 lakhs.
• Persons covered under Sections 44AD, 44AE, 44AF, 44BB and 44BBB, who are declaring lower profits from business than what is estimated.
• The persons who carry out most of the transactions (95% in this case) online, that is through digital transactions with a limit of Rs. 10 Crores for tax audit.