Tax Audit Under Section 44AB: Thresholds and the Cash Transaction Relaxation
Rohit Menon
· Founder & Product Architect· 3 min read
Tax audit is triggered by turnover, but the threshold moves tenfold depending on how much of your business runs in cash. That relaxation is one of the strongest incentives in the Act for digital settlement.
- ✓Business: ₹1 crore, raised to ₹10 crore where cash receipts and payments are each 5 per cent or less.
- ✓Profession: ₹50 crore gross receipts... no, ₹50 lakh.
- ✓Audit report in Form 3CA or 3CB with the statement of particulars in Form 3CD.
- ✓Due date is 30 September, with the return following by 31 October.
The thresholds
For business, one crore rupees of total sales, turnover or gross receipts. That rises to ten crore where cash receipts do not exceed five per cent of total receipts and cash payments do not exceed five per cent of total payments.
For a profession, fifty lakh rupees of gross receipts, with no equivalent relaxation.
Presumptive taxation interactions
A person declaring profits under Section 44AD who subsequently declares lower profits and whose income exceeds the basic exemption limit must get accounts audited. The same applies under 44ADA for professionals declaring below fifty per cent.
Opting out of 44AD also carries a five-year lock-out from the scheme, during which audit may be required. That consequence is frequently overlooked when a single bad year prompts a switch.
The forms
Form 3CA where accounts are already audited under another law, Form 3CB otherwise. Both are accompanied by Form 3CD, a detailed statement of particulars running to over forty clauses covering loans, payments attracting disallowance, TDS compliance and much else.
Clause 22 of Form 3CD specifically reports interest inadmissible under Section 23 of the MSMED Act, and Clause 26 covers Section 43B items — which is how MSME payment delays surface in the audit.
Dates and penalty
The audit report is due by 30 September of the assessment year, and the return by 31 October. Section 271B penalises failure to get accounts audited at half a per cent of turnover, capped at one lakh fifty thousand rupees.
The penalty is not automatic — Section 273B allows it to be waived on reasonable cause, which is one of the few genuinely discretionary reliefs in this part of the Act.
Frequently asked questions
### What is the tax audit limit?
One crore rupees of turnover for business, raised to ten crore where both cash receipts and cash payments are five per cent or less of the respective totals. For professions the limit is fifty lakh rupees of gross receipts.
### What is the penalty for not getting a tax audit?
Half a per cent of turnover or gross receipts, capped at one lakh fifty thousand rupees, under Section 271B. It may be waived on reasonable cause under Section 273B.
### Does the 10 crore threshold apply automatically?
No. It applies only where cash receipts do not exceed five per cent of total receipts AND cash payments do not exceed five per cent of total payments. Both conditions must be satisfied.
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Frequently Asked Questions
What is the tax audit limit?
One crore rupees of turnover for business, raised to ten crore where both cash receipts and cash payments are five per cent or less of the respective totals. For professions the limit is fifty lakh rupees of gross receipts.
What is the penalty for not getting a tax audit?
Half a per cent of turnover or gross receipts, capped at one lakh fifty thousand rupees, under Section 271B. It may be waived on reasonable cause under Section 273B.
Does the 10 crore threshold apply automatically?
No. It applies only where cash receipts do not exceed five per cent of total receipts AND cash payments do not exceed five per cent of total payments. Both conditions must be satisfied.
Rohit Menon
Founder & Product ArchitectArchitecting business document operating systems and automated billing workflows for Indian SMBs, agencies, and enterprises.