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

Under section 63 of the Income-tax Act, 2025, Mr. Arvind Rao, a trader, has total sales of Rs 1.4 crore in the tax year. He does not meet the cash-transaction conditions that would raise the limit to ten crore rupees. Which statement is correct?

His accounts must be audited, because a business person whose sales exceed one crore rupees falls under section 63. The ten crore rupee limit applies only where cash receipts and cash payments are each within 5%, which he does not satisfy.

  1. AHis accounts must be audited by an accountant because sales exceed one crore rupeesCorrect
  2. BHis accounts need not be audited because the limit is ten crore rupees for every business
  3. CHis accounts need not be audited because only professionals are covered by section 63
  4. DHis accounts must be audited only if his profit exceeds fifty lakh rupees

Explanation

For a person carrying on business, the basic limit for audit is total sales, turnover or gross receipts exceeding one crore rupees. The higher ten crore limit applies only if cash receipts and cash payments each do not exceed 5%. Mr. Rao does not satisfy that, so Rs 1.4 crore exceeds the limit and audit is required. The ten crore option wrongly applies the enhanced limit to all.

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