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

Meera Traders, a proprietary business, has a turnover of Rs. 1.4 crore in a tax year. Its cash receipts are 3% of total receipts and its cash payments are 4% of total payments. Under section 63 of the Income-tax Act, 2025, is Meera required to get her accounts audited?

Meera need not get her accounts audited. Her cash receipts (3%) and cash payments (4%) are each within 5%, so the turnover threshold rises from Rs. 1 crore to Rs. 10 crore, and her turnover of Rs. 1.4 crore is below that limit.

  1. AYes, because turnover exceeds Rs. 1 crore and the cash-limit relaxation is irrelevant
  2. BNo, because the threshold becomes Rs. 10 crore as cash receipts and cash payments each do not exceed 5%Correct
  3. CYes, because the Rs. 10 crore limit applies only to companies
  4. DNo, because the threshold for any proprietor is Rs. 2 crore

Explanation

Section 63 raises the turnover limit from Rs. 1 crore to Rs. 10 crore where cash receipts and cash payments each do not exceed 5% of the totals. Here they are 3% and 4%, so the Rs. 10 crore limit applies and turnover of Rs. 1.4 crore is below it. The first option ignores the relaxation.

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