NAVIGATING TAX AUDIT COMPLIANCE

As the tax compliance season begins, businesses and professionals need to assess whether they are liable for a tax audit under Section 44AB of the Income Tax Act, 196].

- CA Pramod Prabhudesai

As regards Assessment Year (AY) 2025-26 (relevant to FY ended 31-03-2025) the tax audit framework continues to reflect the government’s push for digital transactions, transparency, and timely reporting. Tax Audit first came on the statute book from FY 1984-85 (AY 1985-86) and since then has evolved with the changes in the business structures.

Who Needs a Tax Audit?

Tax audit is mandatory for the following categories of taxpayers for FY 2024-25:

Business Entities: If total turnover, sales, or gross receipts exceed Rs | crore. However, if cash receipts and cash payments do not exceed 5% of total receipts and payments respectively, the threshold increases to Rs 10 crore.

Professionals: If gross receipts exceed Rs 50 lakh during the financial year.