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CS Professional · Advanced Direct Tax Laws and Practice · Tax Audit

Under the Income-tax Act, 2025 (applicable from the June 2027 session), Mr. Rohan Mehta, a trader, has business turnover of Rs 1.40 crore in the tax year. He does not satisfy the cash-limit conditions that would raise the threshold to ten crore rupees. Under section 63, what is the position about getting his accounts audited?

Rohan must get his accounts audited. Under section 63 the basic business threshold is one crore rupees of turnover, and the ten crore limit applies only if cash receipts and payments each stay within 5%. He does not meet that, so his Rs 1.40 crore turnover triggers audit.

  1. AAudit is required because turnover exceeds one crore rupeesCorrect
  2. BAudit is not required because the limit is ten crore rupees for all businesses
  3. CAudit is required only if his profit exceeds the basic exemption limit
  4. DAudit is required only if his turnover exceeds fifty lakh rupees

Explanation

Section 63 (Table, Sl. No. 1(a)) requires audit for a person carrying on business whose total sales, turnover or gross receipts exceed one crore rupees. The ten crore limit applies only if cash receipts and cash payments each do not exceed 5%. Rohan fails that condition, so the one crore limit applies and Rs 1.40 crore exceeds it.

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