Compulsory Audit Limit of Accounts – Who and When Require to Audit of Accounts

In the previous article, we have discussed about compulsory maintain books of accounts,  persons who are required to maintain books of accounts and which books are compulsory to maintain for that persons. In this article, we will discuss about compulsory audit of accounts for A.Y.2015-16 and A.Y.2016-17, persons who are required to audit books of account, penalty on failure to audit, requirement of audit etc. Reader can ask their query on the topic of “Mandatory Audit of account books” by submitting the comment form given below.

Audit Limit from F.Y. 2009-10 to F.Y. 2014-15

F.Y. 2009-10 – Business Limit 40 Lakh – Professional Limit 10 Lakh

F.Y. 2010-11 – Business Limit 60 Lakh – Professional Limit 15 Lakh

F.Y. 2011-12 – Business Limit 60 Lakh – Professional Limit 15 Lakh

F.Y. 2012-13 – Business Limit 100 Lakh – Professional Limit 25 Lakh

F.Y. 2013-14 – Same as of F.Y. 2012-13

F.Y. 2014-15 – Same as of F.Y. 2012-13

In Case of Business

If a turnover or gross receipts (A.Y. 2013-14, w.e.f. 1-4-2013 by Finance Act, 2012) of a business is Rs. 1 crore or more than that then Audit of books/accounts is mandatory u/s 44AB. But in A.Y.2012-13, the limit was Rs.60 lacs.

In Case of Profession 

If  gross receipts (A.Y. 2013-14, w.e.f. 1-4-2013 by Finance Act, 2012) of a profession is Rs. 25 lacs or more than that then Audit of books/accounts is mandatory u/s 44AB. But in A.Y.2012-13, the limit was Rs.15 lacs.

In Case of Truck Operators

Truck operators and person engaged in specified businesses declaring their income at an amount less than the amount computer under sections 44AE, 44BB or 44BB as the case may be,shall also, get their account audited u/s 44AB.

In Other Cases

Any assessee carrying on a business, declaring his income at an amount less than the amount computed under section 44AD and whose income exceed the basic exemption limit for the relevant previous year shall also get his accounts audited u/s 44AB.

Who will Audit Account?

In India, Chartered Accountant will audit the account and prepare the report as prescribed in Income Tax Act. They are qualified for accounts and having degree of Chartered Accountancy (CA) from ICAI. They charge fee for their service as prescribed by ICAI. Assessee can also authorize Chartered Accountant to file their income tax return on his behalf or file by himself. It is not mandatory to file income tax return by CA; Only audit report is mandatory. The audit report must be submit before the due dates.

Audit Report Format:

3CA, 3CD – Accounts audited under any other law

3CB, 3CD – Accounts audited under I.T. act

Penalty on Failure to Get Audit Report

As it is mandatory and compulsory to get account audit if the asseesee falls in above conditions specified. Income Tax act has provision to levy penalty on failure to get account audit before due date i.e Rs.1,50,000 or 1/2% of gross receipt or turnover, whichever is less.

6 Comments

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  1. very useful thanks

  2. Thank you
    Easy and simple explanation
    it really help me to know more.

  3. Thanku really helpful Article

  4. For, stock market speculater
    Buy sell of stocks value through out year
    Or turnover of fund (cheques)? Calculated

  5. Sir I filed ITR-4 and fill income in “No Account Case” Column. The Profit was 5 percent filed by me in ITR. Now I have a notice that it is a defective return please file B/s & P&L. Sir I want to know will i get penalety of audit, if i filed B/s & P&L. I filed gross receipt 63 lacs & profit is 3.38 lacs.

  6. Really too much Helpful

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