CA Samaaj

Income Tax Audit Limit FY 2024-25 (AY 2025-26): ₹1 Crore, ₹5 Crore or ₹10 Crore?

"Is income tax audit mandatory if turnover is above ₹1 Crore?"

The answer depends on mode of receipts & payments (Cash vs Banking).

Income Tax Audit is governed by Section 44AB of the Income Tax Act.

Income Tax Audit Limits for FY 2024-25 (AY 2025-26)

Condition (Business Turnover)	Cash Receipts + Cash Payments	Audit Required?	Audit Limit
Turnover ≤ ₹1 Crore	—	No Audit	No Audit
Turnover > ₹1 Cr & ≤ ₹10 Cr	Cash receipts OR cash payments > 5%	Yes	Audit Mandatory
Turnover > ₹1 Cr & ≤ ₹10 Cr	Cash receipts AND cash payments ≤ 5%	No Audit	Presumptive Allowed
Turnover > ₹10 Cr	—	Audit Mandatory	No Relaxation

In Simple Terms:

If your total business payments and receipts through cash are ≤ 5%, then audit limit increases to ₹10 Crore. Otherwise, audit applies after ₹1 Crore.

Important Definitions

Cash Receipts include: Cash sales, cash received from debtors
Cash Payments include: Cash purchases, expenses paid in cash
Banking Modes include: NEFT, RTGS, UPI, IMPS, Net Banking, Cheque

Which Form to Use in Audit?

Situation	Form
Audit for Business or Profession (not under Companies Act)	Form 3CB + 3CD
Audit already done under Company/LLP Act	Form 3CA + 3CD

Key Clauses to Focus in Form 3CD

Clause	Details	Why Important in 2024-25 Audit
Clause 44	GST Expense & Supplier Nature Reporting	Must match with GSTR-2B & Books
Clause 34(a)	TDS/TCS Compliance	Mismatch → High chances of Notice
Clause 21(d)	Cash Payments > ₹10,000 (40A(3))	Disallowance risk
Clause 18	Depreciation	Must follow WDV as per IT Act

When Audit Is Mandatory Even If Turnover Is Small?

If business declares profit lower than 6%/8% under 44AD
If professional income under 44ADA declares profit < 50%

Author: CA Samaaj

CA Samaaj

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