Tax Audit Applicability For Financial Year 2019-20 (Assessment Year 2020-21)

Under section 44AB of the Act, every person carrying on business is required to get his accounts audited, if his total sales, turnover, or gross receipts, in business exceed or exceeds one crore rupees in any previous year. In case of a person carrying on the profession, he is required to get his accounts audited, if his gross receipt in profession exceeds, fifty lakh rupees in any previous year.

In order to reduce the compliance burden on small and medium enterprises, the Finance Act 2020 has brought major amendments to the Income Tax Act, 1961 related to the applicability of the Tax Audit. It has increased the threshold limit for applicability of Tax Audit for a person carrying on business from one crore rupees to five crore rupees in cases where –

i) Aggregate of all receipts in cash during the previous year does not exceed five percent of such receipt; and

ii) Aggregate of all payments in cash during the previous year does not exceed five percent of such payment.

For more details, please refer to the attached document:- Tax Audit Applicability FY 2019-20

DISCLAIMER:-

The information contained herein is in summary form based on Finance Act 2020 & Income Tax Act, 1961. While the information is believed to be accurate to the best of our knowledge, we do not make any representations or warranties, express or implied, as to the accuracy or completeness of this information. Readers should conduct and rely upon their own examination and analysis and are advised to seek their own professional advice. This note is not an offer, invitation, advice, or solicitation of any kind. We accept no responsibility for any errors it may contain, whether caused by negligence or otherwise or for any loss, howsoever caused or sustained, by the person who relies upon it.

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