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CS Executive · Tax Laws and Practice · Procedural Compliance under Income Tax

Meera Associates is a professional firm with gross receipts of ₹60 lakh in a tax year. Its cash receipts and cash payments are each 2% of totals. Under the Income-tax Act, 2025, which statement is correct?

Audit is required. For a profession the limit is gross receipts exceeding fifty lakh rupees, and the cash-transaction relaxation to ten crore applies only to business. Gross receipts of ₹60 lakh exceed the limit, so the cash percentages do not help.

  1. AAudit is not required because the cash conditions raise the limit to ₹10 crore
  2. BAudit is required because professional gross receipts exceed ₹50 lakhCorrect
  3. CAudit is not required because the limit for professions is ₹1 crore
  4. DAudit is required only if cash receipts exceed 5%

Explanation

The enhanced ten crore limit applies only to the business clause (a). For profession, clause (c) applies a fixed limit of ₹50 lakh of gross receipts. Receipts of ₹60 lakh exceed it, so audit is needed irrespective of the cash percentages.

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