5 Cr Turnover !! Do you need Tax Audit ? and Its Applicability.

Shaym- Starting FY 2020-2021 you may not need to get Tax Audit, But wait there is a catch.

Ram-Could you please explain further.

Shayam -Sure ,First its not applicable for Professionals. Secondly you need to have “Total Receipts” or “Total payment” not exceeding 5%.

Ram- Wait what 5% only cash transactions. What do you means By that .

Shayam-Yes Only 5% of to the “Total Receipts” or “Total payment” AND not with the TURNOVER.

Ram -Could you please explain more ?

Shyam- The limit of 5% as referred above as Tax Audit is not applicable, in case of person carrying on business with Turnover up to 5 Crores and Maximum Cash Receipt is not exceeding 5% of aggregate of all the amounts received along with all cash Payment limit of 5% of aggregate of all the payments during the year.

Ram -But how to compute the same.

Shyam- the  Tax Audit is not applicable, in case of person carrying on business with Turnover up to 5 Crores and Cash Receipt is not exceeding 5% of aggregate of all the amounts received along with all cash Payment limit of 5% of aggregate of all the payments during the year.

1. “Aggregate of All Amount Received”  shall consists of the total receipts which may be in cash or Bank or may even be by journal entries, In short, for computing the total receipts, one will be required to compute the total debit side (ignoring opening balance) or receipt side of the cash book during the year plus total of the debit side (ignoring opening balance) or receipt side of the bank book plus the debit the total of the journal if it is in the nature of the payment from the debtors or from any other persons.

2. “Aggregate of All Amount Paid”shall consists of the total payment be by way of Cash or by way of bank or even by way of the journal entries. In short, for computing the total payment, one will be required to compute the total credit side or payment side of the cash book during the year plus total of credit side (ignoring opening balance) or payment side of the bank book plus the credit side of the total of the journal if it is in the nature of the payment to the creditors or to any other persons.

Okay Shyam Now its pretty much clear. Thanks For Explaining the same.