Increase in the turnover limit for Tax Audit u/s 44AB from 5 crores to 10 crores for non cash transactions. Budget 2021-22
Presently, under section 44AB of the Income Tax Act, every person carrying on business is required to get his accounts audited, if his total sales, turnover or gross receipts, in business exceed or exceeds one crore rupees in any previous year. In case of a person carrying on profession he is required to get his accounts audited, if his gross receipt in profession exceeds, fifty lakh rupees in any previous year.
In order to reduce compliance burden on small and medium enterprises, through Finance Act 2020, the threshold limit for a person carrying on business was increased from one crore rupees to five crore rupees in cases where,-
(i) aggregate of all receipts in cash during the previous year does not exceed five per cent of such receipt; and
(ii) aggregate of all payments in cash during the previous year does not exceed five per cent of such payment.
In order to incentivise non-cash transactions to promote digital economy and to further reduce compliance burden of small and medium enterprises, it has been proposed to increase the threshold from five crore rupees to ten crore rupees in cases as above.
Further, as per notice of amendment to Finance Bill 2021 given by Union Finance Minister in Lok Sabha, for the purpose of the above amendment, payment or receipt by cheque and/or draft which is not account payee shall be considered as in cash.
This amendment will take effect from 1st April, 2021 and will accordingly apply for the assessment year 2021-22 and subsequent assessment years.
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