Income Tax Audit under section 44AB- Applicability, Exceptions, Due Date, and Penalty

1. Applicability of Tax Audit:

Tax audit will be applicable if any of the following conditions are met:

Particulars	Business	Profession
Turnover/Gross Receipts	Tax audit is applicable if the turnover exceeds ₹1 Crore in a financial year.	Tax audit is applicable if the gross receipts exceed ₹50 Lakhs in a financial year.
Profits and gains	If the income is declared lower than the prescribed rate under Section 44AD (6% for digital transactions, 8% for cash transactions) and the total income exceeds the basic exemption limit, a tax audit is required. Tax audit applies if income is declared lower than the presumptive income under sections 44AE, 44BB, 44BBB, and the income exceeds the basic exemption limit.	Tax audit is required if income is declared lower than presumptive income under section 44ADA (50% of the gross receipts), provided that the total income exceeds the basic exemption limit.
Opting Out of Section 44AD (Continuation of Audit for Five Assessment Years)	If an assessee declares income lower than the deemed profits and gains under Section 44AD and opts for an audit, they are required to continue with regular taxation provisions for the next five assessment years. During this period, they cannot revert to the presumptive taxation scheme under Section 44AD.	NA

2. Exceptions to Audit under Section 44AB:

Tax audit is not applicable under the following circumstances:

Particulars

Business

Profession

Turnover/Gross Receipts

If business turnover is less than 10 crores

and

Cash receipts and payments do not exceed 5% of total receipts and payments.

Income declared under presumptive basis under section 44AD/44ADA

No audit is required if the turnover does not exceed ₹2 Crores and income is declared under Section 44AD.

Turnover does not exceed ₹3 Crores and income is declared under Section 44AD(1), provided that cash receipts do not exceed 5% of the total turnover, the tax audit is not applicable.

Gross receipts do not exceed ₹75 Lakhs and income is declared under Section 44ADA(1), provided that cash receipts do not exceed 5% of total gross receipts, no tax audit is required.

3. Due Date of Tax Audit:

The tax audit report must be submitted by 30th September of the relevant assessment year, which is one month before the due date for filing the income tax return under Section 139(1)