Revised Income Tax Audit Limits for AY 2022-23

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.

DELAY IN TAX AUDIT DUE TO ONGOING ASSESSMENT IN SOME OTHER ACT. PENALTY U/S 271B TO BE DELETED

Penalty u/s 271B must be removed if a tax audit is delayed due to an ongoing assessment under another Act.

The assessee filed a return of income on January 6, 2016, which was inspected under Section 143. (3). Because the assessee’s total turnover/gross receipts surpassed the Rs.1 crore threshold, he was required to have his accounts audited under Section 44AB of the Act and submit the audit report before the deadline, which in this case was October 31, 2015. Because the accounts were not audited within the time limit, Ld. AO imposed a penalty of Rs.1,12,715/- under section 271B.

The sentence was upheld by CIT(A) on appeal. Assessee preferred an appeal to the tribunal after being aggrieved by the order.

The ld. AR argued before the tribunal that there was adequate cause for the audit to be delayed because the assessee was a cooperative society governed by the Tamil Nadu Cooperative Societies Act, 1983 and its rules. The society’s finances could not be audited for the relevant AY until the assessment was completed. Because the assessee society was not in charge of the matters connected to the appointment and completion of the audit under the aforementioned Act and Rules, the delay in the completion of the audit was not due to any fault on their part. As a result, this qualifies as fair cause, and the penalty was eliminated.

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On the other hand, the Ld. DR justified the sentence by claiming that it was imposed in conformity with the law. After hearing both parties, the ITAT determined that there was adequate cause for the late filing of the income tax return and audit. The assessee was audited under the Tamil Nadu Cooperative Societies Act, 1983, and its implementing rules.

The assessee had no control over the appointment of an auditor or the execution of the audit. It should also be highlighted that the audit was eventually finished on December 31, 2015, and the assessee promptly filed a return. As a result, ITAT removed the penalty.

Do you have to pay tax in advance? hurry up! The deadline is March 15.

Do you have to pay tax in advance?  hurry up! The deadline is March 15.

When an income is paid, taxes are usually deducted/collected at the source. However, because not all incomes are subject to TDS and the tax deducted at source may be less than the applicable slab rate, the remaining tax due must be paid in advance. Let’s look at the advance tax provisions that apply to individuals.

Who has to pay advance tax and when do they have to pay it?

Every taxpayer whose tax due, after deducting TDS and TCS, exceeds Rs. 10,000/- is required to pay advance tax in four instalments on the 15th June, 15th September, 15th December, and 15th March of the financial year, in the ratios of 15%, 30%, 30%, and 40%, respectively. Any advance tax shortfall in any of the instalments must be made up in the next instalment. So, if you haven’t made any instalments for the current year, you can discharge your whole advance tax liability by March 15th. The advance tax burden on capital gains and dividends income can be discharged in instalments due after the income is accrued.

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People who are subject to the presumptive scheme of taxation under Sections 44AD and 44ADA can pay their advance tax in one instalment on March 15th. If you are a senior person with no income from a business or profession, you are free from paying advance tax, which must be paid before the ITR filing deadline.

Interest is due if there is a deficiency or if advance tax is not paid.

You must pay interest of 1% each month for each delay or deficiency in advance tax. Because the next instalment is due after three months, even if you miss the due date by one day, you essentially pay interest for three months. If your advance tax debt is Rs. 1 lakh and you fail to pay the Rs. 15,000/- due on the 15th of June, you will be charged interest of Rs. 450/-, even if you pay it on the 16th of June.

advanced tax

Any advance tax paid by March 31st of the following year is likewise considered advance tax. So, if you fail to pay the advance tax instalment by the 15th of March, or if you pay it on the 15th but still have a shortfall, you can pay it by the 31st of March 2022, but you will have to pay penal interest of 1% for one month in addition to the interest you must pay for any shortfall in previous instalments.

What happens if an advance tax liability is not paid by the financial year’s end on March 31st?

If you are unable to pay the full amount of advance tax, you can pay it under the name of self-assessment tax at a cost. For non-payment or a deficiency in advance tax payment, you must pay interest at 1% per month or part of a month from April 1st of the following year until you really pay the self-assessment tax. If the shortfall does not exceed 10% of your total tax liability, no interest will be charged. This is in addition to the interest that will be charged if advance tax is not paid during the year.

How to decrease tax liability by planning your income tax.

It’s important to remember that if you don’t pay your advance tax on time, you’ll have to pay penalty interest of 1% per month from April 1st to the date of actual payment of self-assessment tax. You’ll also have to pay penalty interest if you file your ITR after the due date, which is usually July 31st for salaried and most tax payers. This interest is payable from the due date of the ITR to the actual filing date of the return. Even if you have already paid your self-assessment tax by the due date for filing your income tax return, you will be charged interest.

What happens if you pay more tax in advance than you owe?

If you pay more tax than your actual tax burden, either through advance tax or TDS, you can seek a refund for the difference, but you’ll have to file an ITR to get it. Furthermore, you are entitled to interest at a rate of 6% per annum on any excess tax paid.