Audit under income Tax Act is compulsory when any one of the following condition get satisfied:-
- 1) When Turnover of the business is beyond 1cr p.a.
- 2) In case of profession when gross receipt is more than Rs50 lakh p.a.
- 3) When turnover in business is less than 2cr and net profit shown in books is less than 8% or 6% as the case may be but more than basic exemption limit.
- 4) When in Profession gross turnover is upto RS 50 lakh but profitability shown is less than 50% but amount of net profit is more than basic exemption limit.
- 5) If any business entity which had opted benefit of section 44AD had left the section before the time frame of 5 year then such business is compulsory liable for audit for the next 5 year irrespective of their turnover.
- 6) If any Profession who had left benefit of section 44AD sub section(2) i.e. presumptive tax rate before the time period of 5 years. Then such profession will come under the compulsory requirement of Audit for Next 5 years irrespective of turnover.