Businesses exceeding turnover limits
A tax audit is mandatory for businesses that cross a specified annual turnover threshold. This provision ensures proper reporting of large business operations.

• Applicable when business turnover exceeds ten crore rupees
  
• Includes manufacturing, trading, and service businesses
  
• Applies to both proprietorship and corporate entities
  
• Turnover must be computed as per income tax guidelines
  

Professionals earning above prescribed limits
Individuals and firms engaged in professions must undergo tax audit if their gross receipts exceed a threshold. This helps validate income declarations in high-earning professions.

• Required if gross receipts exceed fifty lakh rupees annually
  
• Includes doctors, lawyers, architects, and consultants
  
• Tax audit ensures compliance with professional expense norms
  
• Audit report must certify accuracy of income and deductions
  

Entities opting out of presumptive taxation
Assessees who earlier opted for presumptive taxation and later declare lower income are required to get a tax audit. This discourages manipulation of taxable income.

• Applies if income is declared below eight percent or six percent of turnover
  
• Audit needed if the assessee exits presumptive scheme before five years
  
• Ensures income reduction is backed by audited financials
  
• Includes businesses under sections forty four AD, ADA, or AE
  

Companies not under audit but crossing threshold
Some small companies may not be subject to statutory audit under company law. However, if they exceed the income tax threshold, they still require a tax audit.

• Required even if company is exempt from Companies Act audit
  
• Triggered only by turnover and income limits set by tax law
  
• Filing ITR without audit report leads to defective return status
  
• Separate audit obligations exist under tax law and corporate law
  

Entities with international or specified domestic transactions
Companies engaged in related party transactions are subject to additional audit requirements. This ensures proper transfer pricing and compliance with arm’s length principles.

• Form 3CEB required for international or large domestic transactions
  
• Must be certified by a Chartered Accountant with supporting documentation
  
• Transactions must meet conditions under section ninety two E
  
• Tax audit may be triggered in addition to transfer pricing audit
  

Businesses claiming specific deductions and exemptions
Some tax deductions require certification through audit reports. These include deductions for infrastructure, scientific research, and charitable donations.

• Audit required under section thirty five for scientific expenditure
  
• Exempt institutions must file audit report under section twelve A
  
• Audit ensures compliance with conditions for tax deductions
  
• Charitable trusts and NGOs are included in this requirement
  

Persons covered under section forty four AB
Section forty four AB of the Income Tax Act defines the conditions for mandatory tax audit. All persons meeting these criteria must comply by submitting audit reports.

• Includes individuals, firms, LLPs, and companies
  
• Conditions apply to total sales, turnover, or gross receipts
  
• Tax audit must be completed and report filed before due date
  
• Failure attracts penalty under section two seventy one B