Section 44ABAA (inserted by Finance Act 2024, w.e.f. AY 2025-26) regarding compulsory Tax Audit in certain cases even if Turnover is below INR 1 Crore
This is a new audit requirement separate from 44AB. The Govt is tightening the noose around tax evaders from many routes.
It says:
If the aggregate of cash receipts OR aggregate of cash payments exceeds 5% of total receipts/payments of the business, then Tax Audit under section 44ABAA is compulsory, even if 44AB audit is not applicable.
The idea behind this Section is to discourage Cash transactions in this Digital era. Great thinking…
How it works (with example):
Normally, under 44AB:
Audit not needed up to turnover ₹10 crore if cash ≤ 5%.
If cash > 5%, then turnover audit limit falls back to â‚ą1 crore.
Now with 44ABAA:
Even if turnover is below â‚ą1 crore and profit is above 8% (so 44AB would not apply), but if cash > 5%, then audit will still be triggered under 44ABAA.
This Section will apply even if an assessee pays Tax based on presumptive taxation rate
In summary
44AB → covers turnover/profit conditions.
44ABAA → is a standalone trigger → if cash receipts OR payments are above 5%, audit becomes compulsory, regardless of turnover/profit.
So, Section 44ABAA is applicable when:
A business crosses the 5% cash threshold, and otherwise audit under 44AB might not have applied (say, turnover is below 1 crore with good profit).
The main trigger for this Section is percentage of Cash Transactions….
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