Budget 2021 – Tax Audit Limit Raised To ₹ 10 Crores
Budget 2021 – Tax Audit Limit Raised To ₹ 10 Crores
Small businesses which are not registered under Companies Act, do not have a statutory audit. However, if their annual gross turnover exceeds ₹ 1 crore, they are expected to get their accounts audited as per Income-tax Act. Such audit is to be done by a Chartered Accountant (CA) who is expected to submit a report of such audit in form 3CD before a prescribed date every year. The professionals also need to get their books of account audited, however, the turnover limit for such audit for them is ₹50,00,000/-.
The turnover limit for the audit of small businesses was revised in the last Budget – 2020 to ₹5,00,00,000/- from ₹1,00,00,000/-. However, the condition placed was that about 95% of the receipts and payments should have been made in non – cash transactions (digital or banking transactions). This benefit is granted to small businesses in order to promote digital transactions and hence the digital economy.
In Budget – 2021, this limit of ₹5,00,00,000/- is enhanced to ₹10,00,00,000/-. However, out of total transactions, cash transactions are permitted only up to 5% of the receipts and payments and 95% of the receipts and payments must be in non – cash transactions like banking and digital transactions. This measure in the Budget – 2021 is going to ease a lot of compliance burden from the shoulders of small businesses.