Confused About Tax Audit Applicability? Here’s a Clear Flowchart to Help You Decide!

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We are Sharing With You Confused About Tax Audit Applicability? Here’s a Clear Flowchart to Help You Decide! . So kindly Check Out our http://www.castudynotes.com website and ALL the Best for Your upcoming Exams.

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A flowchart demonstrating the steps to determine tax audit applicability based on business and profession criteria, highlighting key income thresholds and requirements.

❓ Confused About Tax Audit Applicability?

Here’s a Clear Flowchart to Help You Decide!

✅ Step 1: Identify the Type of Assessee
Ask: Is the person carrying on Business or Profession?

🔸 If Profession:
Check if Gross Receipts exceed ₹50 lakhs in the financial year.
Yes → Tax Audit is Applicable
No → Tax Audit is Not Applicable
🔸 If Business:
Check if Turnover exceeds ₹1 crore
Yes → Go to next step
No → Check if Section 44AD (Presumptive Taxation) is applicable

🔹 Case 1: Turnover > ₹1 crore
Check if Cash Receipts and Cash Payments are both ≤ 5% of total receipts/payments:
Yes → Turnover limit for audit increases to ₹10 crores
If Turnover > ₹10 crores → Tax Audit Applicable
If Turnover ≤ ₹10 crores → Tax Audit Not Applicable
No → Tax Audit Applicable (Limit stays at ₹1 crore)

🔹 Case 2: Turnover ≤ ₹2 crores and 44AD Opted
Has the person opted for Presumptive Taxation under Section 44AD?
Yes → Check Profit Declared:
If Net Profit < 6% (if digital receipts) or < 8% (cash), and Total Income exceeds basic exemption limit → Tax Audit Applicable
Otherwise → Tax Audit Not Applicable
No → Tax Audit Not Applicable

✅ Summary:
Category Threshold Tax Audit Required?
Profession Gross Receipts > ₹50 Lakhs Yes
Business Turnover > ₹1 Cr (if >5% cash) Yes
Business Turnover ≤ ₹10 Cr (if ≤5% cash) No
44AD Opted Profit < 6%/8% + Income > BEL Yes

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Flowchart illustrating tax audit applicability based on business or profession status, gross receipts, turnover thresholds, and cash transaction limits.
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