Income Tax Audit Limit for AY 2025-26 (FY 2024-25)
Welcome to our Blog, Income Tax Audit Limit for AY 2025-26 (FY 2024-25)! Income Tax Audit is an essential requirement for businesses and professionals under Section 44AB of the Income Tax Act. In this guide, we will explain who needs a tax audit, the applicable limits, required documents, charges, the step-by-step process, and the benefits of completing it correctly. Our experienced team is here to assist you at every stage, ensuring your accounts are accurate, compliant, and filed on time. By following proper audit procedures, you can avoid penalties, detect errors early, maintain financial transparency, and make your business more credible with banks and investors. This guide is designed to help you understand the process in simple terms and make tax compliance easier and stress-free.
Tax Audit Rules and Limits for AY 2025-26 (FY 2024-25)
If your business or profession earns more than the limit set by the Income Tax Department, a tax audit is mandatory. You must keep your accounts accurate, report income correctly, and maintain proper records of all transactions. Only a qualified Chartered Accountant can conduct and certify the audit report, so choose a trusted professional for this. Make sure your books are updated regularly and that all expenses and receipts are properly documented.
Other important rules include submitting the audit report before the due date to avoid fines or penalties, reconciling your bank statements, and keeping all supporting documents handy in case of queries. Following these rules keeps your business compliant, builds trust with banks and investors, and helps you manage finances smoothly. Regular audits also help identify mistakes early and prevent bigger issues in the future.
Who Needs a Tax Audit This Year?
1. Tax Audit for Business Owners
If you run a business, a tax audit is needed when your turnover exceeds ₹1 crore under regular provisions. For businesses following the presumptive taxation scheme (Section 44AD), a tax audit is required if turnover exceeds ₹10 crore and cash receipts are less than 5%. This ensures your accounts are accurate and compliant with the law.
2. Tax Audit for Professionals
Professionals such as doctors, lawyers, or consultants must undergo a tax audit if their gross receipts exceed ₹50 lakh under Section 44ADA. This helps verify that income is reported correctly and all financial records are in order.
3. Special Cases Requiring Audit
Even if your turnover or income is below the usual limits, certain taxpayers may still need an audit under Section 44AB(2). This can depend on the type of business, professional activity, or specific sources of income. Following these rules keeps your finances transparent and avoids penalties.
Documents Required for Income Tax Audit
Proof of business registration, along with the owner’s PAN and Aadhar card
Bank statements for the financial year
Records of sales and purchases
Bills, invoices, and expense details
Vouchers, registers, and stock records
Complete books of accounts
Filed GST and TDS returns
Cash book entries
Details of assets, investments, and other financial records
Any additional documents requested by the Chartered Accountant
Tax Audit Charges for Businesses and Professionals
The starting fee for a tax audit by a CA is usually around Rs.10,000/- The fee can be higher if your business has many transactions or complex accounts. It’s best to discuss the fee with your CA before the audit so there are no surprises and the process goes smoothly.
How to Complete Tax Audit in 3 Days
Step 1: Share Your Documents
Reach out to us and send all the necessary documents for the tax audit, including bank statements, invoices, bills, books of accounts, GST/TDS returns, and any other financial records. Providing complete and accurate documents helps speed up the audit process.
Step 2: Review by Chartered Accountant
Our experienced CA will carefully review all your documents and accounts. If anything is missing or needs clarification, the CA will contact you to gather additional information. This ensures that your records are accurate and complete.
Step 3: Draft Audit Report
After completing the audit, the CA will prepare a draft audit report and share it with you for verification. You can review the report, clarify any queries, and suggest corrections if needed before the final submission.
Step 4: Filing and Final Report
Once the draft is approved, the CA will submit the final audit report on the Income Tax portal. You will receive a signed physical copy with UDIN for your records, which can be used for compliance, bank loans, or any official requirement. Following this process ensures a smooth and error-free tax audit.
Business & Professional Audit Limits for AY 2025-26
Business: ₹1 crore turnover limit for regular businesses; ₹10 crore for presumptive taxation.
Professionals: ₹50 lakh gross receipts under Section 44ADA.
Special Cases: Certain professions or business types may have different thresholds.
| Type | Turnover / Receipts | Requirement |
|---|---|---|
| Business (Normal) | > ₹1 crore | Tax Audit Mandatory |
| Business (Presumptive 44AD) | > ₹10 crore | Tax Audit Mandatory |
| Professionals (44ADA) | > ₹50 lakh | Tax Audit Mandatory |
| Special Cases | Varies | As per IT Act Section 44AB |
Penalties for Not Filing Your Tax Audit
Late Filing Fee: ₹5,000 if filed after due date.
Penalties under Section 271B: Can go up to 0.5% of turnover.
Legal Issues: Repeated non-compliance can lead to scrutiny or additional notices from the Income Tax Department.
Impact on Loan or Financial Approvals: Non-compliance may affect credibility with banks and financial institutions.
Avoid These Common Tax Audit Mistakes
Many businesses and professionals make small mistakes during a tax audit that can cause fines or delays. Here are some common ones to avoid:
Not keeping proper records:
Keep your books updated and organized to make the audit easier.Missing TDS entries or payments:
Make sure all TDS deductions and challans are recorded correctly.Claiming wrong deductions:
Only claim deductions allowed by the Income Tax rules.Filing the report late:
Submit the audit report before the due date to avoid penalties.Not matching bank statements with accounts:
Check that your bank records and books of accounts match to avoid discrepancies.
How Tax Audit Impacts Loans and Financial Transparency
Verified tax audit reports improve credibility with banks, lenders, and financial institutions.
Helps in obtaining business loans, credit, or overdraft facilities quickly.
Ensures transparent financial reporting for investors, partners, and stakeholders.
Demonstrates compliance with Income Tax laws, which builds trust.
Makes it easier to apply for government schemes or grants requiring audited accounts.
Helps in accurate assessment of business performance, supporting better financial planning.
Reduces the risk of penalties or legal issues, giving lenders confidence in your records.
Your Trusted Partner for Income Tax Audit – Limits for AY 2025-26 (FY 2024-25)
Income Tax Audit can seem complicated, but we make it easy for you. For AY 2025-26 (FY 2024-25), it’s important to know the audit limits under Section 44AB to stay on the safe side and avoid penalties. A proper audit helps keep your financial records accurate, ensures transparency, and builds trust with banks and investors.
At Itradda.com, our team guides you through the entire Income Tax Audit process – from knowing if you are eligible to preparing and filing the audit report. We make it simple so you can focus on your business without worry.
For more information, contact our team today.
Contact Us: 99987 28800
Website: Itradda.com
