Tax audit is the verification of the books of accounts of an assessee to validate the income tax computation and compliance with the laws of Income Tax. Auditing should be done by chartered accountant who has certified. Every person who earns income by business or by profession and maintains books of accounts and who is not enrolled under presumption taxation scheme U/Ss 44AD,44 ADA or 44AE of Income Tax Act,1961 When his income exceeds the limit given under the Act. Tax audit is required for following persons:-

1) BUSINESS: - Business means any activities carried on for the purpose of earning profit. Tax Audit is required when turnover exceeds Rs. 1 Cr. in any previous year.
2)  PROFESSION:- when the gross receipt exceeds Rs. 50lakhs in any previous year, then Tax audit would be required. A profession or professional could be any of the following as per Rule 6F of the Income Tax Rules, 1962:
1. Architect
2. Accountant
3. Authorised representative
4. Engineer
5. Film Artist – Actor, Cameraman, Director, Music Director, Editor, etc.
6. Interior Decorator
7. Legal Professional – Advocate or Lawyer
8. Medical Professional – Doctor, Physiotherapist, etc.,
9. Technical Consultant

Presumptive Taxation Scheme- A person enrolled under the presumptive taxation scheme U/S 44AD. Then he will be required to tax audit if the total sale or turnover exceeds Rs. 2crores and when he claims that the profits of the business are lower than the profits calculated in accordance with the presumptive taxation scheme.
Tax audit will be conducted by Chartered Accountant who has certificate of practice and is in full practice. The Tax auditor carries systematic examination of books of accounts as per the format described by the tax audit department. Section 44AB also provides that who cannot
conduct tax audit. They are:-
1)  Any member in part-time practice is not eligible to perform tax audit.
2)  A chartered account cannot audit the accounts of a person to whom he is indebted for more than Rs 10,000.
3)  A statutory auditor will be deemed to be guilty of professional misconduct if he/she accepts the appointment of Public Sector Undertaking/Government Company/Listed Company and other Public Company having turnover of Rs 50 crores or more in a year and accepts any other work, assignment or service in regard to the same undertaking/company on a remuneration which in total exceeds the fee payable for carrying out the statutory audit of the same undertaking/company.
4)  The Chartered Accountant who is assigned with the task of writing and maintaining the books of account of the assessee should not audit such accounts.
5)  The audit of accounts of a professional firm of Chartered Accountants cannot be performed by any partner or employee belonging to such firm.
6)  An internal auditor of the assessee cannot be appointed as tax auditor.
7)  An auditor cannot not accept more than 45 tax audit assignments in a particular financial year.

Removal of Tax Auditor
The management can remove a tax auditor if he delayed the submission of report before the specified due date and tax auditor cannot be removed on the ground that he has submitted an adverse audit report.