Tax Audit Applicability and Tax Audit Return Filing
Tax audit is an important compliance requirement under the Income Tax Act, 1961. Every year, thousands of businesses and professionals across India go through this process to ensure that their accounts are true, accurate, and in accordance with tax laws. However, many taxpayers still feel confused about when a tax audit becomes applicable, who needs it, the limits involved, and how the tax audit return filing works.
In this detailed guide, Nvedya Professionals LLP explains tax audit applicability in simple words so that business owners, professionals, and taxpayers can clearly understand what is required and how to stay compliant.
What Is a Tax Audit? – Understanding the Basics
A tax audit is essentially a review of your business or professional accounts by a Chartered Accountant (CA) to make sure your financial statements follow all rules and reflect correct income, expenses, and deductions.
The Income Tax Department mandates a tax audit under Section 44AB for certain categories of taxpayers who meet specified turnover, gross receipt, or profit thresholds.
Nvedya Professionals LLP ensures that the tax audit process is carried out accurately, helping businesses avoid penalties, notices, or unnecessary legal complications. The aim is not just compliance, but also transparency and reliable financial reporting.
Tax Audit Applicability – Who Needs a Tax Audit?
Understanding tax audit applicability is essential because non-compliance can lead to penalties under Section 271B. Here is a simple explanation of when a tax audit becomes mandatory:
1. Tax Audit for Businesses
A business must undergo a tax audit if:
Turnover exceeds ₹1 crore
This is the general limit for most businesses.
Turnover exceeds ₹10 crore (if cash transactions are limited)
If cash receipts and cash payments are both less than 5%, then the turnover limit for tax audit increases to ₹10 crore.
This relaxation encourages digital transactions.
2.Tax Audit Applicability for Professionals
Professionals (like doctors, lawyers, architects, accountants, consultants, freelancers) must conduct a tax audit if:
Their gross receipts exceed ₹50 lakh in a financial year.
3. Tax Audit Under Section 44AD (Presumptive Taxation)
Businesses opting for Presumptive Taxation Scheme (44AD) must get a tax audit if:
- They declare a profit less than 8% (or 6% for digital payments) AND
- Their income exceeds the basic exemption limit.
4. Tax Audit Under Section 44ADA (Professionals)
Professionals under presumptive taxation (44ADA) must undergo a tax audit if:
- They declare profit less than 50% of total receipts AND
- Their income crosses the taxable limit.
5. Tax Audit Under Section 44AE (Transporters)
Tax audit is required if:
- A transporter declares income lower than the prescribed fixed income, and
- Total income is above the basic exemption limit.
Nvedya Professionals LLP helps taxpayers evaluate their financials and determine whether a tax audit is mandatory so they can stay fully compliant every year.
Documents Required for Tax Audit
To complete the tax audit smoothly, the following documents are required:
- Ledger accounts
- Sales and purchase register
- Bank statements
- GST returns
- TDS details
- Fixed asset register
- Loan statements
- Expense vouchers
- Previous year’s audit report
- Income tax login access
Nvedya Professionals LLP prepares, verifies, and organizes all documents to ensure accuracy and efficiency throughout the audit process.
How Tax Audit Applicability Return Filing Works
After completing the audit, a CA issues the Tax Audit Report in forms 3CA/3CB along with Form 3CD, which contains detailed financial information.
Here is the tax audit return filing process explained in simple steps:
Step 1 – Appointment of Chartered Accountant
A CA must be appointed through the Income Tax portal by the taxpayer.
Step 2 – Verification of Books of Accounts
The CA reviews all financial statements, bills, vouchers, and compliance records.
Step 3 – Preparation of Tax Audit Report
The audit report includes:
- Business details
- Profit and loss data
- Balance sheet information
- TDS compliance
- Loan details
- Depreciation
- Deductions & disallowances
Step 4 – Uploading Tax Audit Report (Form 3CA/3CB & 3CD)
The CA uploads the tax audit report on the Income Tax Portal.
Step 5 – Taxpayer Approval
The taxpayer logs in and approves the uploaded report.
Step 6 – Filing of Income Tax Return
Once approved, the taxpayer files the ITR before the due date.
Nvedya Professionals LLP ensures timely filing to avoid penalties and notices.
Due Dates for Tax Audit and Return Filing
- Tax Audit Report Due Date: 30th September
- Income Tax Return (ITR) Due Date: 31st October
Missing deadlines can result in penalties, interest, or delays in processing refunds. Nvedya Professionals LLP helps taxpayers complete the entire process before deadlines.
Penalty for Not Conducting a Tax Audit
If a taxpayer fails to conduct a required tax audit, the penalty can be:
- 0.5% of total turnover/receipts, or
- ₹1,50,000,
whichever is lower.
This is why timely compliance is important.
Why Choose Nvedya Professionals LLP for Tax Audit Services?
Nvedya Professionals LLP offers expert tax audit and compliance services to businesses, professionals, and firms across India.
The team ensures:
- Accurate tax audit reports
- Compliance with Income Tax laws
- No penalties or notices
- Proper documentation
- Smooth coordination with CA
- Timely filing of reports and returns
Their goal is to help businesses stay compliant while focusing on growth and operations.
Conclusion
A tax audit is a critical part of financial compliance for businesses and professionals in India. Understanding tax audit applicability, audit limits, and the return filing process helps avoid risks, penalties, and legal issues. With experienced guidance from Nvedya Professionals LLP, taxpayers can manage their audits smoothly, stay stress-free, and maintain complete accuracy in financial reporting.
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