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Tax audit
A tax audit is when the IRS decides to examine your tax return a little more closely and verify that your income and deductions are accurate. Typically, your tax return is chosen for audit when something you have entered on your return is out of the ordinary.
Audit for Businesses
Starting financial year FY 2016-17 (income tax return filing for AY 2017-18), the turnover limit for businesses which can opt for presumptive income scheme has been increased from Rs 1 crore to Rs 2 crore.For other businesses who do not opt for presumptive income scheme, audit limit will remain Rs 1 crore.There has been no change in the audit limit for businesses who are not opting for presumptive income scheme.
Audit for Professionals
The tax audit limit for professionals is Rs 50 lakhs from FY 2016-17 onwards.
Starting financial year FY 2016-17 (return filing for AY 2017-18), presumptive income scheme has been extended to professionals with receipts up to Rs 50 lakhs. Under this scheme, their income is assumed to be 50% of receipts. Books of accounts are not required to be maintained and audit is not applicable.

Turnover Limit for Audit
Category of Taxpayer FY 2016-17 Onwards
Business (Not opting Presumptive Income Scheme) : 1 crores
Professionals(Not opting Presumptive Income Scheme) : 50 Lakhs
Business opting Presumptive Income scheme u/s 44AD : 2 crores
Professionals opting Presumptive Income scheme
u/s 44ADA : 50 lakhs

What is the objective of Tax Audit?
Report the requirements of Form No 3CA/3CB and 3CD
1.To ensure the book of account and other records of assessee are properly maintained.
2.Book of account accurately reflect the income of tax payers and deduction are correctly declared.
3.Facilitate the administration of tax laws by proper presentation of accounts before tax authorities and considerably save the time of assessing officers in carrying out routine verification.

Who should get their books Audited?
A person is required to get his books of accounts audited by chartered accountant as per section 44AB if he satisfies any of the following conditions
1.An individual carrying on business and his/her total sales, turnover or gross receipts (as the case may be) for the financial year exceeds 1 crore.
2.A person carrying on profession and gross receipts in profession for the year exceed Rs 25 Lakhs.
3.Any person carrying on a business where the profits and gains from the business are determined on a presumptive basis under section 44AE, 44BB or 44BBB, and who has claimed their income to be lower than the profits or gains of his business.
4.Any person carrying on a business where the profits and gains from the business are determined on a presumptive basis under section 44AD and who has claimed such income to be lower than the profits or gains of their business, yet exceeds the maximum amount which is not chargeable as income tax. 

Penalties for not getting the accounts audited as required by section 44AB
According to section 271B, the assessing officer may impose penalty if assessee is failed to file tax audit report as required under section 44AB. The penalty shall be lower of the following amounts:
1. 5% of total sales, turnover or gross receipts (as the case may be), in business in such years or years.
2. 5% of the gross receipts in profession, in such year or years.
3. Rs 1,50,000