Tax Audit Provisions as per the Income Tax Bill, 2025
Introduction to Tax Audit
A tax audit is an examination and verification of books of accounts to ensure compliance with tax laws. Under the Income Tax Bill, 2025, Section 63 governs tax audits, specifying the conditions under which businesses and professionals must undergo an audit.
Applicability of Tax Audit under Section 63 (Income Tax Bill, 2025)
| Category | Turnover/Gross Receipts Limit | Tax Audit Required? | Conditions for Tax Audit |
|---|---|---|---|
| Business (Digital Transactions ≥ 95%)* | Above ₹10 crore | Yes | If at least 95% of aggregate of all the receipts and payments are through digital modes. |
| Business (Digital Transactions < 95%) | Above ₹1 crore | Yes | If less than 95% of transactions [Receipt & Payments] are through digital modes. |
| Professionals | Above ₹50 lakh | Yes | No additional conditions. |
| Presumptive Taxation (Section 58) – Business | Less than ₹2 crore | Yes | If income declared is lower than the deemed profit under presumptive taxation. |
| Presumptive Taxation (Section 61) – Profession | Less than ₹50 lakh | Yes | If income declared is lower than the deemed profit under presumptive taxation. |
*Here digital mod means : Through specified banking or online mod
Due Date for Furnishing Tax Audit Report
The tax audit report must be furnished by the specified date, which is one month before the due date for filing the return of income under Section 263(1).
Consequences of Non-Compliance (Section 446)
If a person fails to conduct a tax audit or furnish the report under Section 63, the Assessing Officer may impose a penalty, which is the lower of:
- 0.5% of total turnover or gross receipts; or
- ₹1,50,000
