Definition
Tax Audit (44AB)
Section 44AB requires businesses and professionals above specified turnover or receipt thresholds to get their accounts audited by a chartered accountant.
A tax audit under Section 44AB is a verification of a taxpayer's books by a chartered accountant, who reports prescribed particulars in a standard audit form. It applies once turnover or gross receipts cross specified limits, with a higher turnover threshold available where cash transactions are minimal, nudging businesses toward digital payments.
Taxpayers who opt for presumptive schemes like 44AD and declare income at or above the deemed rate are generally spared the audit. Failure to get a required tax audit done attracts penalties, making the thresholds an important compliance checkpoint.
Related terms
- Faceless AssessmentFaceless assessment is a system in which income-tax scrutiny and assessment are conducted electronically without physical interface between the taxpayer and a specific officer.
- Presumptive Taxation 44ADSection 44AD lets eligible small businesses declare income at a prescribed percentage of turnover instead of maintaining detailed books, simplifying compliance.
- Presumptive Taxation (44ADA)Section 44ADA lets eligible professionals declare a fixed percentage of their gross receipts as income, simplifying tax filing without maintaining detailed books of accounts.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.