Turnover Definition For Tax Audit

The meaning of turnover sales for the purpose of tax audit is discussed as follows.

Turnover definition for tax audit. In the guidance note on terms used in financial statements published by icai the expression sales turnover has been defined as. Tax audit is governed by section 44ab of the income tax act. 1 speculation business the aggregate of both positive and negative differences is to be considered as the turnover. Tax audit is the official examination or audit of the tax department to the tax return that declares by taxpayers as required by law.

In this article we are going to discuss about the various changes made by the finance act 2020 under section 44ab applicable for financial year 2019 20 assessment year 2020 21 and financial year 20 21 assessment year 2021 22. Turnover means the gross amount of revenue recognised in the profit and loss account from the sale supply or distribution of goods or on account of services rendered or both by a company during a financial year the gst law also do not define the term turnover. As per section 44ab a person is required to conduct compulsory audit of books of accounts if the turnover or gross receipts of business or profession crosses the threshold limit. 5 crores for business under section 44ab where at least 95 percent turnover is made on digital transactions.

Audit under section 44ab is required when turnover exceeds rs. In case of financial year 2017 18 if the annual turnover of a registered taxpayer exceeds rs. As per guidance note on terms used in financial statement published by the icai. The tax audit turnover threshold limit has been increased to rs.

But in case of speculation business shares trading and futures options turnover is determined in the following manner. Tax audit is applicable if the turnover during the fy exceeds rs. 5 crore from ay 2020 21. Turnover meaning under gst audit.

However the central sales tax act 1956 defined the term turnover as. Applicability of tax audit under section 44ab depends upon gross receipts sales or turn over of an assessee so the first and foremost thing is their calculations. For the same financial year fy 2018 19 requirement of gst audit for business with turnover less than rs 5 crore is waived off. If an assessee has opted for presumptive taxation and his profit is less than 6 of the turnover he can opt out of presumptive taxation.

The aggregate amount for which sales are effected or services rendered by an enterprises. In general taxpayers declare their tax return monthly and annual to the. 2 crores in a financial year then he was required to get his accounts audited by a chartered accountant or cost accountant. In order to boost less cash economy the increased threshold limit for tax audit shall apply only to those businesses which carry out less than 5 of their business transactions in cash.