Tax Audit Threshold increased to 5Cr from AY 2020-21

Tax Audit Threshold increased to 5Cr from AY 2020-21 ; Change in Due Date of Tax Audit and Income Tax Return Filing Tax Audit Threshold increased, cheer for MSME, some clarifications required In wake of ease of doing business, Tax Audit threshold has been increased to 5 crores from existing 1 crore by Budget 2020. This news is indeed a cheer for the MSME Sector where now bussiness can save their cost of CA Certification for tax audit. Current provisions of Tax Audit: ♠ 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. New provisions of Tax Audit: The Tax Audit Threshold for MSMEs has been increased to 5 Crores, from existing 1 Crore for person carrying bussiness. This facility comes with 2 conditions:

♦ Cash reciepts is not more than 5% of aggregate cash reciepts;

♦ Cash Payment is not more than 5% of aggregate cash payments.

[caption id="attachment_86655" align="aligncenter" width="852"] Tax Audit Threshold increased to 5Cr from AY 2020-21[/caption] Point of Discussion :

♣ Here again the goverment is promoting digital transaction

♣ Also it is pertinant to note that flaws or tax loss in case of digital transaction are easily tracable by Tax Authority, so you ideally don't need an audit for that; But it is still difficult to trace tax loss from cash transaction which has no trail. Thus Tax Audit will be required in case of high cash transaction.

Clarification pending: Clarification is required if this new threshold is applicable in case of profession as well Change in Due Date of Tax Audit and Income Tax Return Filing:

Due Date of filing ITR for tax payers who are required to get their Accounts Audited	31st October
Due Date of filing Tax Audit Report	30th September (One month prior to due date of Income Tax Return Filing)

Other Amendments: Accordingly, sections 194A, 194C, 194H, 194I, 194J and 206C will be amended as provisions of these sections fasten liability of deduction/collection of TDS/TCS on certain categories of person, if the gross receipt or turnover from the business or profession carried on by them exceed the monetary limit specified in clause (a) or clause (b) of section 44AB.