Applicability of Tax Audit in India

The Quicko Table for tax audit is wrong

if some one incurred losses in f&o and total income more than 2.5 L it is not required to get audited if he has not opted fot PTS in last five years.

the total table is misguiding people only… and there is two times >5%

Hi @tapas_panda

Yes, a tax audit will not be applicable if you have not opted out of PTS in the previous 5 Financial years and turnover is less than 10 crore.

We, at Quicko follow the conservative approach where we have observed multiple customers receiving IT Notices for not getting books of accounts audited even though not opted out of PTS scheme and turnover is less than 10 crore.

Quicko is an online tax filing platform and is not involved in tax audits in any manner.

I am doing FnO trading from FY 2020-21, fy 2021-22 and losses in both years and among these both years my other income was less than 2.5Lacsperannum but now from this FY 2022-23 if I started again and now my other income is greater than 2.5 lacs per annum & turnover less than 25Lacs is Tax audit applicable to me? I never opted for Presumptive taxation scheme in any of these years ?Thank you. Please reply.

Is tax audit only required for Intraday trading? Or is it also required for delivery based trading?

Intraday turnover around 2,40,000
Intraday profit around 1,80,000

Short term trades turnover around 3 Crs.
Short term trades profit around 8,50,000

Do I require audit?

Hi @Mayureshm

As per your stated situation, tax audit is not mandatory.

You can read more about it here:

Hi @knight

Tax audit is applicable to the Business & Profession income, not required for capital gains.

Incase of Business & Profession Income, Tax Audit is applicable u/s 44AB, if Profits < 6% of turnover, which doesn’t seem in your case.

You can read more about it here:

Hope this helps.

I filed my income return (ITR-3) for AY 22-23 on 30th July 2022. However, I have received multiple emails from the IT department this month (September) to ask CA to submit my Tax Audit Report.

In the past I had asked CA to submit tax-audit reports (under section 44AB). This year, I learnt that a tax audit is not applicable if turnover is below 10 Cr and cash transactions do not exceed 5 percent of the total payment/receipts. In AY-22-23, my turnover is 5.81 Cr and 100 percent transactions are cashless/digital. However, as I was not aware of the new rule, I opted for tax-audit in AY 21-22 ( in AY 21-22, my turnover was Rs 5.55 Cr and 100 percent transactions were cashless/digital.). I had never availed Computation of Presumptive Business Income Under Section 44AD in the past.

Given the above context, I have following queries:

a) Is tax-audit applicable in my case for AY22-23. Does the fact that I opted for tax-audit in AY-21-22 (despite having 100% digital transactions and turnover being less than 10 Cr) will have any effect on tax-audit applicability this year
b) If I opt for tax-audit, do I also need to revise my return which has been already filed ?

Request you to kindly clarify on the same.

Hi @swayam_kumar

If you have got an email as shown in the screenshot below, then it is an email campaign from the Income tax department for general awareness about Audit reports. You can ignore this email as NO ACTION is required for the same.

Here are answers to your questions:
a) When turnover is between INR 2Cr and INR 10Cr, neither Section 44AB (or any of its subsections) nor Section 44AD (presumptive taxation scheme) is applicable. Therefore, Tax Audit is not applicable irrespective of profit or loss. (considering all the 100 percent transactions were cashless/digital)

b) Only if you opt for a tax audit, then you are required to submit a revised return.
The last day to file a return for an individual to who whom the audit is applicable is 30 Sept 2022.

Thanks for your response. Does the fact that I mistakenly opted for audit last year (despite having turnover less than 10 Cr and 100 % digital transactions) has any consequences for this year’s tax audit applicability.

Also, is there any penalty if tax audit was unnecessarily/ignorantly submitted under section 44AB.

Hi @swayam_kumar

If you had mistakenly opted for an audit last year, it shall have no consequences for this year’s tax audit.
And there is no penalty if a tax audit was wrongly submitted.
There shall be consequences for non-filing/delay of the same.

Hey thanks for valuable reply, I went through article but I didn’t understand but if I haven’t opted for presumptive taxation scheme in any of the past five years and this financial year my other income exceeds 2.5lac per annum, audit is not mandatory? what is the turnover limit? Thanks!