Does the 5% cash limit affect my tax audit?

Name: Vijay R Singh & Co.
Address: Office No. 4, Vishal CHSL, D Wing, Sir Mathuradas Vasanji Road, Azad Nagar, Opp. Andheri Gymkhana, Andheri East, Maharashtra, 400069, IN
Telephone: +91 98607 23959

CA Vijay R Singh, FCA
Chartered Accountant · ICAI M.No. 153926 · FRN 136869W

Short answerYes — if your cash receipts and cash payments are each 5% or less of the total, the business tax-audit turnover limit rises from ₹1 crore to ₹10 crore, a relief for largely digital businesses. Cross 5% in either and the ₹1 crore limit applies again.

The 5% test

Both cash receipts and cash payments must each be within 5% of total receipts/payments to use the ₹10 crore limit.

What counts as cash

Banking-channel receipts/payments are not ‘cash’; physical cash is. Account-payee cheque/NEFT/UPI help you stay under 5%.

Audit

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This answer is general information for businesses, not professional advice. Tax rates, thresholds and forms change with each Finance Act — please confirm the current position for your own facts, or speak to us, before acting.