Tax Audit Amendment by Budget 2021

Tax Audit Amendment to section 44AB of the Income-tax Act 1961, by the Union Budget 2021, Finance Minister Nirmala Sitharaman is presenting Union Budget 2021-22 on 1^st Feb 2021, the amendment the provision for tax audit as under –

Under section 44AB of the 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 aggregate of all receipts in cash during the previous year does not exceed five per cent of such receipt; and (Receipts Basis)

(ii)         aggregate of all payments in cash during the previous year does not exceed five per cent of such payment.(Payment Basis)

In union budget 2021, FM proposed the amendment in order to incentivise non-cash transactions to promote digital economy and to further reduce compliance burden of small and medium enterprises, it is proposed to increase the threshold from FIVE CRORE rupees to TEN CRORE rupees IN CASES LISTED ABOVE.

This amendment will take effect from 1st April, 2021 and will accordingly apply for the assessment year 2021-22 and subsequent assessment years.