Applicability of Tax Audit in India

Income Tax Tax Audit
266

Hi @ash

Here are the answers to your questions.

Trading turnover up to INR 2 Cr,

  • If the taxpayer has incurred a loss or the profit is less than 6% of Trading Turnover and total income is more than the basic exemption limit, a Tax Audit is applicable.
  • If the taxpayer has a profit of more than or equal to 6% of Trading Turnover, Tax Audit is not applicable.

If a tax audit is applicable, then you are required to maintain books of accounts. However, if you have opted for a presumptive taxation scheme, then books of accounts is not required to be maintained.
Here’s a read on Section 44AD - Presumptive Taxation for Business - Learn by Quicko

ITR 3 is to be filed in case of trading in intraday & FnO as it is considered as business income under section 43(5). Hence, a balance sheet must also be maintained since you are filing ITR 3.

As rightly said by you, futures turnover is the absolute sum of profit & losses.

Also, if you file a belated return, you will not be able to carry forward any losses.

Hope this helps.

267

Hello Sir/Mam,

I have a question regarding applicability of tax audit for our client.
Last year FY 21-22 our client’s books of account get audited on account of crossing threshold limited u/s 44 AD.
This Year FY 22-23 our client gross receipt is less than 50 lacs, please confirm do we required to prepare tax audit report of our client for this year. Please reply.

It would be helpful to share supporting income tax provision or sections if tax audit is not applicable on our client for this year.

268

Hi @SakshiInagarco

A tax audit under the presumptive taxation scheme is applicable if your profits are less than 6%/8% (including losses) of the turnover and the total income exceeds ₹2.5 lakhs for FY 2022-23.

Here’s an article for your reference. Click here.

Hope this helps.

269

Please clarify im doing a business of sale and purchase of land (No Develppement) and i do have turnover 1.5 crores.

  1. Tax audit applicable
  2. GST applicability
270

Hi @venky_venkatesh

No, none of them is applicable on the sale of land.