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

CA Nisha, a professional, has gross receipts of Rs. 48 lakh in a tax year, all through banking channels. In the next tax year, she receives Rs. 52 lakh. Applying section 63 (profession limit), which is correct?

Audit is not required in the first year but is required in the second. The profession limit is gross receipts exceeding Rs. 50 lakh; Rs. 48 lakh is within it and Rs. 52 lakh exceeds it.

  1. AAudit is required in both years
  2. BAudit is not required in the first year but is required in the second yearCorrect
  3. CAudit is required in neither year because the limit is Rs. 1 crore
  4. DAudit is required in neither year because banking receipts are exempt from the limit

Explanation

For a profession, audit applies when gross receipts exceed Rs. 50 lakh. Rs. 48 lakh does not exceed it, while Rs. 52 lakh does. The enhanced Rs. 10 crore limit applies only to business turnover, not to profession.

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