Under Section 44AB of the Income Tax Act, every business with total sales or turnover exceeding ₹1 Crore (or ₹10 Crores if cash transactions remain below 5%) and professionals with gross receipts over ₹50 Lakhs are mandatorily required to have their accounts audited by a practicing Chartered Accountant.
1. High-Scrutiny Form 3CD Clauses
- Clause 21(a): Personal expenditure disallowances and penalties levied under foreign or domestic statutes.
- Clause 21(d): Section 40A(3) cash payments exceeding ₹10,000 per day to a single person.
- Clause 26: Section 43B statutory dues (EPF, ESIC, GST, Bonus) paid on or before the ITR filing due date.
- Clause 31: Acceptance and repayment of loans/deposits under Section 269SS and 269T exceeding ₹20,000 other than account payee cheque or electronic clearance.
2. Compulsory Audit Thresholds for FY 2025-26
Ensure compliance with the latest revised statutory limits before the tax filing season:
- Regular Businesses: Mandatory audit if gross turnover exceeds ₹1 Crore.
- Digital Businesses (95%+ Non-Cash): Threshold relaxed to ₹10 Crores.
- Professionals: Mandatory audit if gross receipts exceed ₹50 Lakhs (or ₹75 Lakhs with 95% digital receipts).
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