44ADA and Tax audit
This query is : Resolved
23 May 2018
a partnership firm in consultancy business having small turnover of 9 lakh has tax deducted at souce by client u/s 194J. is it compulsory to declare profit for such small entity @50% ? they do not have that much profit also. is it compulsory to do tax audit if profit is to be shown under 50% ? plz guide
23 May 2018
Yes. Accounts of the firm are required to be Audited if Profit is shown below 50% of Total Gross Receipts.
23 May 2018
It is advisable to get the accounts audited as the rate of tax is 30% in case of a firm.
23 May 2018
Pl ensure the profession is that mentioned in 44AA(1).
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23 May 2018
is it not possible to not opt for 44ADA and maintain proper books of accounts and declare less than 50% profit without profit
23 May 2018
Please first ensure whether the Gross Receipts are from a Profession as prescribed U/s 44AA as Warrier sir has pointed out. Question of applicability od S 44ADA arises only when the profession is covered U/s 44AA.
Please also clarify "less than 50% without profit" and the manner through which you will attain your so called objective.
Please also clarify "less than 50% without profit" and the manner through which you will attain your so called objective.
23 May 2018
Dear Paras sir. business is included in management and operational consultancy. and business has actual profit of around 20% as not all professionals have 50% profit. we have actual books of accounts ready in hand. so my objective is very clear. I want to avoid hardship to assess who really doesnt have profit and that much of turnover. so my question is can i provide p&l balance sheet in ITR 5 and file return declaring less than 50% profit without TAX AUDIT ?
23 May 2018
No...
If You are earning professional incomes as per sec 44AA (1) and You ll file u/s 44ada then You must show profit 50% or above...
Otherwise If you will show the Profit less than 50% then Audit is applicable as per sec 44AB...
No way for showing less than the limit except tax Audit...
24 May 2018
In case of a professional firm if there is any profit below 50 of Gross Reciepts then Section 44ADA prescribes for Audit. There are certain legal compulsions to which the public has to follow.
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