As per Income Tax Act,,1961
Every person who derives income by way of Business or profession and maintains books of accounts and has not opted for computation of income on presumptive basis under section 44AD, 44ADA or 44AE of the Income-tax Act, 1961 has to get tax audit done provided his income exceeds the prescribed threshold limit.The following person are required to get tax audit done in the given cases.
1. A person carrying on business if the total sales/ turnover exceeds Rs. 1 crore during the previous year relevant to assessment year.
2. A person carrying on profession if the Gross receipts exceeds Rs. 50 lakhs during the previous yearrelevant to assessment year.
Also, the person who has opted for computing profits and gains of business on presumptive basis under section 44AD earlier and 5 years have not lapsed since then but the assessee has opted out of such presumptive income and his income exceeds the ceiling for chargeability of income tax, is also required to get tax audit done.
Further where a person has opted for presumptive scheme under section 44ADA and he claims his income lower than the deemed profits and his income exceeds the ceiling for chargeability of income tax, is also required to get tax audit done.
Tax audit is also mandatory for the assessees opting for presumptive scheme under section 44AE, 44BB and 44BBB and claiming income lower than the deemed profits.
As per companies Act,2013
As per section 139 of the companies act, 2013, every company shall appointment first auditor within one month of incorporation who shall hold the office till the first annual general meeting
Subsequent auditor shall be appointed for term of five years subject to ratification from the members of the company.
a)Individual as auditor for more than one term of five consecutive years;and
(b) an audit firm as auditor for more than two terms of five consecutive years:
(i) an individual auditor who has completed his term under clause (a) shall not be eligible for re-appointment as auditor in the same company for five years from the completion of his term;
(ii) an audit firm which has completed its term under clause (b), shall not be eligible for re-appointment as auditor in the same company for five years from the completion of such term:
Auditor to sign audit reports, balance sheet , profit and loss account
The person appointed as an auditor of the company shall sign the auditor’s report or sign or certify any other document of the company in accordance with the provisions of sub-section (2) of section 141, and the qualifications, observations or comments on financial transactions or matters, which have any adverse effect on the functioning of the company mentioned in the auditor’s report shall be read before the company in general meeting and shall be open to inspection by any member of the company.