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CA Final · Direct Tax Laws & International Taxation · Tax Audit and Ethical Compliances

CA Nisha, a consultant, has gross professional receipts of Rs. 55 lakh in the tax year and does not opt for any presumptive scheme. Her partner firm, unrelated, is irrelevant. Under section 63 of the Income-tax Act, 2025, which is correct?

Audit is required. For a profession, section 63 applies when gross receipts exceed Rs. 50 lakh, and her receipts are Rs. 55 lakh. The higher Rs. 10 crore limit for low cash transactions applies only to business turnover, not to professions.

  1. ANo audit, as the professional limit is Rs. 1 crore
  2. BAudit is required, as gross receipts exceed Rs. 50 lakh; the Rs. 10 crore relaxation applies only to businessCorrect
  3. CAudit is required only if profits exceed Rs. 50 lakh
  4. DNo audit, since cash relaxation extends to professionals making the limit Rs. 10 crore

Explanation

For a profession, section 63 requires audit if gross receipts exceed Rs. 50 lakh. The Rs. 10 crore enhancement in clause (b) refers to the business limit only. Rs. 55 lakh exceeds Rs. 50 lakh, so audit is required. Option three wrongly uses profit as the test.

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