Tax Audit Limits for AY 2022-23: Thresholds, Due Dates, and Penalties

For Assessment Year 2022-23, the tax audit limit under Section 44AB of the Income Tax Act is ₹1 crore of turnover for businesses, rising to ₹10 crore where cash transactions stay within strict caps, and ₹50 lakh of gross receipts for professionals. Separate audit triggers apply to anyone using a presumptive taxation scheme who declares income below the prescribed rate. The financial year in question is April 1, 2021 to March 31, 2022.

Business Turnover: ₹1 Crore

Any person carrying on a business whose total sales, turnover, or gross receipts crossed ₹1 crore during FY 2021-22 must get their accounts audited by a chartered accountant under Section 44AB(a).¹ This applies across proprietorships, partnerships, and companies. It is the default limit, and it sits lower in practice for anyone in a presumptive scheme who declares below the prescribed profit rate.

The ₹10 Crore Limit for Low-Cash Businesses

A business with turnover between ₹1 crore and ₹10 crore can stay out of audit entirely if it keeps cash use small. Both of these conditions must hold during the financial year:

Total cash receipts, including for sales and turnover, do not exceed 5% of total receipts.
Total cash payments, including expenditure, do not exceed 5% of total payments.

When both hold, the effective audit threshold rises to ₹10 crore.² For this calculation, any cheque or bank draft that is not “account payee” counts as cash, as do receipts or payments outside the banking system or approved electronic modes. Capital transactions count in the 5% test, not just revenue items. Cross either ceiling and the ₹1 crore limit applies again, no matter how close turnover sits to ₹10 crore.

Professional Gross Receipts: ₹50 Lakh

Professionals are covered separately under Section 44AB(b). If gross receipts from a profession crossed ₹50 lakh during FY 2021-22, audit is mandatory.¹ There is no digital-transaction alternative here; the ₹50 lakh figure stands.

Covered professions include legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, and other fields notified by the Central Board of Direct Taxes. Receipts from multiple professional activities aggregate for the test. Professional fees, retainers, and reimbursements all count.

Audit Triggers Under Presumptive Schemes

Presumptive schemes let smaller taxpayers declare income at a fixed percentage of turnover without keeping detailed books. Declaring less than that fixed percentage brings a separate audit obligation under Section 44AB, even where turnover sits well below ₹1 crore or ₹50 lakh.

Section 44AD for Eligible Businesses

Under Section 44AD, an eligible business can declare 8% of turnover as profit, or 6% on the portion received through account payee cheques, bank drafts, or electronic transfers.³ Declare below these rates while total income exceeds the basic exemption limit, and you must maintain books and get them audited under Section 44AB.⁴

Opting out of the scheme has a lock-in effect. If you leave 44AD by declaring below the presumptive rate, you cannot use the scheme again for five assessment years, and during those years Section 44AB(e) requires audit if your income exceeds the basic exemption limit.²

Section 44ADA for Professionals

A professional using Section 44ADA declares 50% of gross receipts as income. Declare below 50% while total income exceeds the basic exemption limit, and audit becomes mandatory under Section 44AB(d).² The trigger applies whether or not receipts fall under the standard ₹50 lakh limit.

Section 44AE for Goods Carriage Operators

In the goods transport business, income under Section 44AE is deemed at ₹1,000 per ton of gross vehicle weight per month for heavy goods vehicles above 12,000 kg, and ₹7,500 per vehicle per month for lighter goods carriers.⁵ Declare below these rates and Section 44AB(c) requires audit.¹

Due Dates and Forms

The original deadline for filing the tax audit report for AY 2022-23 was September 30, 2022. The CBDT extended this to October 7, 2022, for assessees whose reports fell due on that original date.⁶ The income tax return for audited taxpayers was then due by October 31, 2022.

The report is filed electronically using one of two form combinations. Form 3CA with Form 3CD applies where the taxpayer is already required to get accounts audited under another law, such as a company audited under the Companies Act. Form 3CB with Form 3CD applies where the audit is required only under the Income Tax Act. Form 3CD is the detailed statement of particulars that the chartered accountant signs and uploads to the e-filing portal.⁷

Penalty for Missing the Audit

Failure to get accounts audited, or to file the audit report by the due date, attracts a penalty under Section 271B. The Assessing Officer can levy 0.5% of total sales, turnover, or gross receipts, capped at ₹1,50,000 for a single financial year.⁸ The penalty applies both to a missing audit and to a completed audit filed late.

Section 273B allows relief where the taxpayer shows reasonable cause for the failure. Examples include serious illness, natural disasters, or unavailability of books because they have been seized by authorities. The burden of proving reasonable cause rests on the taxpayer, and the Assessing Officer decides whether to accept the explanation at a formal hearing.

1
Income Tax Department. Income-tax Act, 1961 – Audit of Accounts of Certain Persons Carrying On Business or Profession
2
Income Tax Department. Income-tax Act, 1961 – Section 44AB
3
Income Tax Department. Small Businessmen – Benefits Allowable
4
Income Tax Department. Income-tax Act, 1961 – Section 44AD
5
Income Tax Department. Tax on Presumptive Basis in Case of Certain Businesses
6
Press Information Bureau. CBDT Extends Due Date for Filing of Various Reports of Audit for AY 2022-23
7
Income Tax Department. Form 3CA-3CD User Manual
8
Indian Kanoon. Income Tax Act 1961 – Section 271B