Income Tax Audit, By Chartered Accountant in India AY 2019-20

As per the Income Tax Act,1961 in India certain types of businesses are mandatorily required to get tax audit done as per the provisions of Section 44AB of the Income Tax Act, 1961 and maintain the book of accounts as required according to provisions of Section 44AB of the Act. Here, we look at the tax audit limit for different types of business entities in India and tax audit applicability.

Tax Audit Limit for Proprietorships for Assessment Year 2019-20
Proprietorship firms or individual carrying on a profession with a gross receipts of more than Rs.50 lakhs must get tax audit done. Tax audit is mandatory for proprietorship firm doing business, if gorss sales turnover exceeds Rs.2 crores.

However if the gross receipt of prfession doese not exceeds Rs. 50 lakh and profit is below 50 percent of the receipt/turvover. On the other hand in case of business, even if turnover crossed 1crore but below Rs. 2 crore and business is having profit below 8 percent or 6 percent(in case of no cas receipt) then also said firm or idividual have to get their books of accounts audited from Chartered Accountant and file Form 3CB & 3CD

Specified profession under the Income Tax Act includes professions such as:

Legal
Medical
Engineering
Architectural
Accountancy
Technical Consultancy
Interior Decoration
Authorized Representative
Film Artist

In case a income of proprietor from business or profession (other than the above specified profession), maintenance of books of accounts is mandatory, if business or professional income exceeds Rs.2.5 lakhs in any one of the three preceeding years.

In case of proprietorship firm, it is mandatory to maintain books of accounts, if total gross sales turnover or gross receipts exceed Rs.25 lakhs in any one of the three previous years.

Tax Audit Limit for Partnership Firms
Partnership is a profession firms is into profession with gross receipts of esceeding Rs.50 lakhs must get tax audit sone. Partnership firm is into business must get tax audit done, if gross sales turnover exceeds Rs.2 crores.

Partnership firms involved in carrying on a specified profession would be required to maintain book of accounts as per Income Tax Act, if gross receipts is more than Rs.1.5 lakhs in all three previous years.

Partnership firms is receiving income profession (other than specified profession), book of accounts must be maintained if income exceeds Rs.2.5 lakhs in any one of the three years previous year.

Partnership firms involved in carrying business, then maintenance of books of account is mandatory if total sales turnover or gross receipts exceed Rs.25 lakhs in any one of the three preceding years.

Tax Audit Limit for LLP
Tax Audit will be applicable if the annual turnover exceeds Rs. 2 Core, however as per LLP Act, LLP with an annual turnover of more than Rs.40 lakhs or capital contribution of Rs.25 lakhs are required to be audited by a Chartered Accountant. Maintenance of book of accounts is mandatory for LLP, irrespective of annual turnover.

Tax Audit Limit for Companies
Tax Audit as per Income Tax Act, will be applicable if the annual turnover exceeds Rs. 1 Core, However all types of companies including private limited company and one person company are required to get Audited by Chartered Accountant every year as per Companies Act, 2013 irrespective of annual turnover or capital. Also, maintenance of book of accounts is mandatory for companies, irrespective of annual turnover.

Companies having having tax liability as per MAT i.e. despite the company is in loss still have to pay income tax as per Minimum Ulternate Tax, have to obtain certificate fron Chartered Accountant for MAT calculation and get the form 29B Filed.

Author:

eStartIndia Team