The tax audit is mandatory for all the taxpayers under the requirements for tax audit stated in the Section 44AB of the Income Tax Act 1961. The business whose turnover is more than 1 crore in case of businesses and in case of professionals, Rs. 50 Lakh is required and mandatory for tax audit. In order to get the tax audit done, every taxpayer must appoint a Chartered Accountant to audit their accounts. In order to maintain the proper book of account, other revenue and expenditure records, a company must tax audit in a proper manner with the help of a professional. Such a case, when there is loss in business and the loss must be carry forward, the tax audit is necessary. In terms of businesses, if profits are less than 8% (6% on Digital transactions) of the turnover and in case of professionals, 50% of receipts then also tax audit is necessary.
All businesses, whether it is a private limited company or one-person company must tax audits irrespective of their annual turnover. The tax audit also ensures that there are no chances of fraud, if the total taxes and claims have been filed correctly and in a proper manner.