The turnover is approx. 5L and there are only losses , is audit still applicable if we don’t intend to carry forward losses (salary above min. tax bracket)?
@Quicko can you.
Tax audit is applicable when:
- Profit is less than 6% of the turnover
- Turnover is above the threshold.
You can use this tool to determine your tax audit applicability:
It is a good practice to carry forward your losses which you can set off against future gains.
However, in practice when turnover is minimal, taxpayers still carry forward the losses without a tax audit.
Thank you team @Quicko,
Owing to smaller turnover if we do not choose to go for audit and got flagged by IT dept. , what is process that follows - is it penalty / we have an option to get audited and report ?
If you do not opt-in for the tax audit and got a notice from the Income Tax Department for the same, you can get your books of accounts audited by a practicing CA and file a revised return. Usually, there won’t be any penalty if you respond to the ITD in the prescribed time.