Applicability of Tax Aduit.
The following categories of persons are required to get his accounts audited under section 44AB.
- A person carrying on business whose total sales, turnover or gross receipts in business during the previous year exceeds Rs. 1 Crore. The limit for his category was increased from 60 lakhs to Rs. 1 Crore by Finance Act, 2012 w.e.f. A.Y. 2013-14.
- A person carrying on profession whose gross receipts in profession in the previous year exceeded Rs. 25 lakh. This limit was increased from Rs. 15 lakh to Rs. 25 lakh by Finance Act, 2012 w.e.f. A.Y. 2013-14.
- A person covered under section 44AE, 44BB or 44BBB, if such person claims that the profits and gains from the business are lower than the profit and gains computed on a presumptive basis under these sections for the relevant previous year (irrespective of his turnover).
- A person covered under section 44AD, if such person claims that the profits and gains from the business are lower than the profits and gains computed to accordance with the provisions of section 44AD and if his income exceeds the basic exemption limit.
The point which should be noted here is that in the first three categories, the person is liable to get his accounts audited under section 44AB, ever if his income is below the taxable limit, if his sales, turnover or gross receipts exceeds prescribed limit. However, in case of fourth category, the persons would be subject to audit under section 44AB if their income exceeds the basic exemption limit.
Exception to Tax Audit
Where any such person is required to get his accounts audited under any other law, (for example, in case of companies), it is sufficient if the person gets the accounts audited under such other law and furnishes the report in the form prescribed under this section.
The requirement of audit under section 44AB also does not apply to a person who drives income of the nature referred to in sections 44B and 44BBA.
Audit Report under section 44AB
Any person who is covered by the above four categories is required to get his accounts audited by an accountant as defined in the Explanation to section 228(2) of the Income Tax Act, 1961 i.e. a chartered accountant and furnish the report in the prescribed form with other prescribed particulars before the due date for filing return of income under section 139.
As per Rule 6G(1) of Income tax Rules, 1962 prescribed audit report are as under:
- Form 3CA:- In case of a person who carries on business or profession and who is required under any other law to get his accounts audited.
- Form 3CB:- In case of a person who carries on business or profession and who is not required under any other law to get his accounts audited.
As per Rule 6G(2) of Income-tax Rules, 1962, particulars which are required to be furnished under section 44AB shall be in Form 3CD