Income Tax

Whether tax audit is applicable or not in my case

Kollipara sundaraiah November 22, 2022

If person has following income then tax audit is applicable or not:

Professional income (Sec 194J receipts): Rs. 40,17,200 and Profit is more than 50%
Turnover of pharmacy business : Rs. 85,00,000 and Profit is less than 8%

Answer: Tushant November 23, 2022

Tushant November 23, 2022

Answer:

As per section 44AB of the Income-tax Act, 1961, tax audit is applicable (for above-mentioned cases only) :

*Particulars*	*Applicability of Audit*
Carrying on any profession	If total gross receipts from the profession exceed Rs. 50 lakhs.
Carrying on Business	If total sales/turnover/gross receipt from the business exceeds Rs. 1 crore. However, if cash transactions do not exceed 5% of the total receipts and payment applicability will be changed to exceeding Rs. 10 crores.
Carrying on the Profession which is eligible for presumptive taxation u/s 44AD/44ADA	If profits from the profession are lower than the profits computed under Section 44AD/44ADA or If the total income exceeds the maximum exemption limit.

Now, since :

your profit from business is < 8%
your professional income is is eligible for presumptive taxation u/s 44ADA (assumed) and profit is > 50%
you have not opted out of 44AD/44ADA in any of the last 5 previous years or never opted for 44AD/44ADA (assumed)

then provisions of Tax Audit would not be applicable.

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