CS Professional · Advanced Direct Tax Laws and Practice · Tax Audit
Ravi Traders, a proprietary business, has a turnover of Rs 3 crore for the year. Its cash receipts are 4% of total receipts and cash payments are 3% of total payments. It has no presumptive-scheme claim. Is a tax audit mandatory?
A tax audit is not mandatory. Because cash receipts (4%) and cash payments (3%) each stay within 5%, the turnover limit is Rs 10 crore rather than Rs 1 crore. Turnover of Rs 3 crore is below this, and no presumptive-scheme claim exists.
- AYes, because turnover exceeds Rs 1 crore
- BYes, because cash receipts exceed 2%
- CNo, because the enhanced turnover limit of Rs 10 crore appliesCorrect
- DNo, because proprietors are never subject to tax audit
Explanation
The business turnover limit rises 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 4% and 3%, so the higher limit applies. Turnover of Rs 3 crore is below it, so no audit is needed. Option A ignores the cash condition.
Did you get it right without looking?
One question tells you little. A timed set on Tax Audit shows your real accuracy, how long you take and where you lose marks.
More Tax Audit questions
- Under the Income-tax Act, 2025 (applicable from the June 2027 session), by what date must the tax audit report under section 63 be furnished…
- Under Section 348 of the Income-tax Act, 2025, what must the person in receipt of the income of a registered non-profit organisation do rega…
- Meera Associates carries on business with turnover of Rs 6 crore. Total receipts are Rs 6.2 crore, of which Rs 40 lakh were received by a ch…
- Under section 63(5)(a) of the Income-tax Act, 2025, what is the 'specified date' for furnishing the audit report for a tax year?
- Rohan, a trader, had sales of Rs 8 crore in the tax year. He received Rs 8 crore in total, of which Rs 30 lakh was in cash and Rs 20 lakh wa…
- A consultant's gross receipts from profession are Rs 80 lakh in the tax year, and a separate law requires her accounts to be audited. Under …