In this article, we will discuss compulsory tax audit of accounts for A.Y.2022-23 (F.Y.2021-22 from 01-04-2021 to 31-03-2022)., You can find here the tax audit limits for businesses, and tax audit limits for professionals (like doctors, accountants, architects etc. for the assessment year 2022-23. It covers all the amendments related to the finance act 2021 and finance act 2022.
Under section 44AB of the Act, every person carrying on business is required to get his accounts audited, if his total sales, turnover or gross receipts, in business exceed or exceeds one crore rupees in any previous year. In case of a person carrying on profession he is required to get his accounts audited, if his gross receipt in profession exceeds, fifty lakh rupees in any previous year. In order to reduce compliance burden on small and medium enterprises, through Finance Act 2020, the threshold limit for a person carrying on business was increased from one crore rupees to five crore rupees in cases where,-
(i) aggregate of all receipts in cash during the previous year does not exceed five per cent of such receipt; and
(ii) aggregate of all payments in cash during the previous year does not exceed five per cent of such payment.
In order to incentivise non-cash transactions to promote digital economy and to further reduce compliance burden of small and medium enterprises, it is proposed to increase the threshold from five crore rupees to ten crore rupees in cases listed above.
In case of person engaged in business and opting for presumptive taxation under section 44AD:
| Turnover limit for the previous year | Amount of profit with respect to turnover (in %) | Whether cash receipts less than 5% of the Turnover | Whether cash payment less than 5% of the total payment | Is Tax audit Applicable? |
|---|---|---|---|---|
| More than 10 Crores | Not applicable | Not applicable | Not applicable | Yes |
| More than 2 crore but upto 10 Crore | Not applicable | Yes | Yes | No |
| More than 2 crore but upto 10 Crore | Not applicable | No | No | Yes |
| More than 1 crore but upto 2 Crore | More than 8% or 6% of Turnover | Not applicable | Not applicable | No |
| More than 1 crore but upto 2 Crore | Less than 8% or 6% of Turnover | Not applicable | Not applicable | Yes |
| Less than 1 Crore | More than 8% or 6% of Turnover | Not applicable | Not applicable | No |
| Less than 1 Crore | Less than 8% or 6% of Turnover | Not applicable | Not applicable | Yes |
In case of person engaged in profession and opting for presumptive taxation under section 44ADA:
| Turnover limit for the previous year | Amount of profit with respect to turnover (in %) | Is audit Applicable? |
| More than 50 Lakhs | Not applicable | Yes 44AB(b) |
| Upto 50 Lakhs | More than 50% | No |
| Upto 50 Lakhs | less than 50% (sec 44ADA) | Yes 44AB(d) |
Due Dates for Audit
Here is the complete table of due dates for the audit report for a.y. 2023-23 along with form number.
| Taxpayers | Audit Form No. | Statement Particulars | Due Dates for Audit and Uploading Audit Report |
| In the case of a person covered under section 44AB (who gets his accounts audited) | Form No. 3CB | Form No.3CD | One month prior to the due date of furnishing the income tax return. |
- A person covered by section 44AB should get his accounts audited and should obtain the audit report on or before 30th September of the relevant assessment year.
- If not extended, the tax audit report for the financial year 2021-22 should be obtained by 30th September 2022. The due date to file an income tax return (Business requiring audit other than transfer pricing) is 31st October 2022.
- A chartered accountant must electronically file the tax audit report with the Income Tax Department.
- For more detail about due dates and to upload the audit report visit the official website of the income tax department. (i.e., at https://www.incometax.gov.in/iec/foportal).
Penalty for Not Getting Accounts Audited
In accordance with section 271B, an Assessing Officer may impose a penalty if a person who is required to comply with section 44AB fails to get his accounts audited in respect of any year or years. The penalty shall be lower of the following amounts:
(a) 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in the profession, in such year or years.
(b) Rs. 1,50,000.
Nevertheless, if reasonable cause is proved, no penalty shall be imposed.