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Tax audit

Whether the accounts must be audited under the Income-tax Act for the year, tested clause by clause: the turnover and gross-receipts limits, the cash test that raises the business limit to ₹10 crore, and the presumptive schemes under sections 44AD, 44ADA and 44AE, including the five-year consequence of opting out of 44AD.

Taxpayer

Residential status for the year The presumptive schemes are open to residents only.

Activity

Total income for the year exceeds the basic exemption limit? Relevant where income is declared below the presumptive rate.

Business

Total sales, turnover or gross receipts (₹)

Cash receipts and cash payments each within 5% of the totals? A cheque or draft that is not account-payee counts as cash.

Nature of business Commission and agency businesses cannot use section 44AD.

Profit declared this year at 8% of turnover or more (6% for amounts received digitally)?

Income declared under section 44AD in any of the five preceding years?

Already opted out of section 44AD in one of the last five years, after declaring under it earlier? If yes, the assessee is outside 44AD for five years from the year of opting out.

Section 44AB of the Income-tax Act, 1961, read with sections 44AD, 44ADA and 44AE. Check business and profession separately if both are carried on; audit is required if either test is met. A cheque or draft that is not account-payee counts as cash for the 5% test.

Preliminary computation only; not professional advice. See the disclaimer.