Applicability of sec 44ab
This query is : Resolved
06 April 2013
Dear Sir, please clarify the following situation relating to applicability of Tax Audit:
1.Turnover for P.Y. 2012-13 is 75 Lakh, and net profit for the year amounts to Rs. 2.25 lakh, all the books as per sec 44AA are maintained will there be requirement to get the Accounts audited?
2. what will be the situation if the same person get his accounts audited for P.Y. 2011-12 due to his turnover of 65 lakh. will he be required to get his accounts audited for P.Y. 2012-13 if his turnover is 75 Lakh?
1.Turnover for P.Y. 2012-13 is 75 Lakh, and net profit for the year amounts to Rs. 2.25 lakh, all the books as per sec 44AA are maintained will there be requirement to get the Accounts audited?
2. what will be the situation if the same person get his accounts audited for P.Y. 2011-12 due to his turnover of 65 lakh. will he be required to get his accounts audited for P.Y. 2012-13 if his turnover is 75 Lakh?
06 April 2013
According to the section 44AB tax audit turnover limit for F.Y 2012-13 or A.Y 2013-14 is Rs.1 crore for business and Rs. 25 lacs for professionals. So those turnover exceeds the above limit(s) should be require to do tax audit u/s 44AB. And for the business who are not comes under section 44AB (i.e tax audit not applies) required to offer their income as per section 44AD i.e minimum of 8% on gross turnover for the purpose of income tax. And those who wanted to offer lower income than income prescribed u/s 44AD is required to maintain regular books of accounts as per section 44AA and if their gross total income exceeds basic exemption limit then must and should be required to make tax audit u/s 44AB.
Thus for your case Turnover for A.Y 2013-14 is Rs.75 lacs i.e tax audit is not mandatory as per section 44AB. So you have to offer your income as per section 44AD i.e minimum profit of 8% on gross turnover. Thus you have to offer minimum of Rs.6 lacs for tax purpose for A.Y 2013-14 but you want to offer Rs.2.25 lacs only i.e lower of income prescribed as per section 44AD so you have to maintain regular books of accounts so you are maintaining and your gross total income is exceeds basic exemption limit so required to make tax audit.
Conclusion: In your case your turnover doesn't exceeded tax audit turnover as per section 44AB so for your case tax audit is optional and it may be become as mandatory at his will. I.e you should be required to offer minimum income of Rs.6 lacs from business for tax purpose but you want to offer Rs.2.25 lacs only since your gross total income exceeds the basic exemption limit so you required to make tax audit.
So if you are willing to offer Rs.6 lacs profit from business for tax purpose then you need not to make tax audit otherwise if you offering lower profit than it then required to maintain regular books of accounts and has to make tax audit since your gross total income exceeds basic exemption limit.
Note: Liability of the tax audit will depending on the tax audit turnover and the option of the assessee for such A.Y but not required tax audit in current year due to the tax audit applied for the last year.
I.e since due to the tax audit of your case for A.Y 2012-13 for current A.Y 2013-14 tax audit is not mandatory.
Turnover of the current year will decides the mandatory of tax audit and the option of the assessee will decides the liability of tax audit no other things will not decides or effects the tax audit liability.
In one word For your case for A.Y 2013-14 required to offer minimum income of Rs.6 lacs profit from business if you are will to this then tax audit not required in case if you are not will to offer this and will to offer Rs.2.25 lacs then required to maintain regular books of accounts and has to make tax audit.
OM SAI SRI SAI JAI JAI SAI
Thus for your case Turnover for A.Y 2013-14 is Rs.75 lacs i.e tax audit is not mandatory as per section 44AB. So you have to offer your income as per section 44AD i.e minimum profit of 8% on gross turnover. Thus you have to offer minimum of Rs.6 lacs for tax purpose for A.Y 2013-14 but you want to offer Rs.2.25 lacs only i.e lower of income prescribed as per section 44AD so you have to maintain regular books of accounts so you are maintaining and your gross total income is exceeds basic exemption limit so required to make tax audit.
Conclusion: In your case your turnover doesn't exceeded tax audit turnover as per section 44AB so for your case tax audit is optional and it may be become as mandatory at his will. I.e you should be required to offer minimum income of Rs.6 lacs from business for tax purpose but you want to offer Rs.2.25 lacs only since your gross total income exceeds the basic exemption limit so you required to make tax audit.
So if you are willing to offer Rs.6 lacs profit from business for tax purpose then you need not to make tax audit otherwise if you offering lower profit than it then required to maintain regular books of accounts and has to make tax audit since your gross total income exceeds basic exemption limit.
Note: Liability of the tax audit will depending on the tax audit turnover and the option of the assessee for such A.Y but not required tax audit in current year due to the tax audit applied for the last year.
I.e since due to the tax audit of your case for A.Y 2012-13 for current A.Y 2013-14 tax audit is not mandatory.
Turnover of the current year will decides the mandatory of tax audit and the option of the assessee will decides the liability of tax audit no other things will not decides or effects the tax audit liability.
In one word For your case for A.Y 2013-14 required to offer minimum income of Rs.6 lacs profit from business if you are will to this then tax audit not required in case if you are not will to offer this and will to offer Rs.2.25 lacs then required to maintain regular books of accounts and has to make tax audit.
OM SAI SRI SAI JAI JAI SAI
Message likes :
1 times
06 April 2013
Dear Sir, i think 44AD applies to those who do not maintain books of accounts and are required to show profit @ 8% if their turnover does not exceed Rs. 1 crore?
But my question is that if a person is "ALREADY REGULARLY" maintaining books u/s 44AA, and his turn over is less than 1 Crore, will he be required to get his accounts audited u/s 44AB read with sec. 44AD?
But my question is that if a person is "ALREADY REGULARLY" maintaining books u/s 44AA, and his turn over is less than 1 Crore, will he be required to get his accounts audited u/s 44AB read with sec. 44AD?
07 April 2013
Yes, each and every person who are the business holder and their turnover doesn't exceeded Rs. 1crore comes under section 44AD. I.e section 44AD applicable for those who are not applicable for tax audit u/s 44AB.
So in your case section 44AD applicable.
OM SAI SRI SAI JAI JAI SAI
So in your case section 44AD applicable.
OM SAI SRI SAI JAI JAI SAI
07 April 2013
Dear sir, it means that if turnover of a person is even Rs.1 lakh and and he is already maintaining books of accounts and his profit is less than 8 % he will be liable to get his accounts audited?
07 April 2013
I think you properly not understand the section 44AD and section 44AB.
According to the section 44AB. For the business assessess whose total turnover exceeds Rs. 1crore for A.Y 2013-14 are required to make tax audit of their books of accounts and for professionals tax audit limit turnover is Rs. 25 lacs. So whose turnover exceeds tax audit limit then should be required to make tax audit of their books of accounts. I.e means who are making tax audit should be maintain regular books of accounts as per section 44AA. As well as those who are not mandatory for tax audit and required to offer their income according to section 44AD or 44AE but they offering lower income than prescribed under such sections required to maintain tax audit.
According to the section 44AD: All business assessee who are not liable for tax audit must and should be required to offer their income from business is minimum of 8% on gross turnover for tax purpose and those who are offering their income as per section 44AD need not to require maintain regular books of accounts. And those are liable to offer their income as per section 44AD but they offering lower income than prescribed in section 44AD then required to maintain regular books of accounts as per section 44AA and if their gross total income exceeds basic exemption limit then required to make tax audit as per section 44AB.
Note: Transport operators doesn't comes under section 44AD they comes under section 44AE.
So according to the above provisions whose gross turnover exceeds tax audit turnover limit then Tax audit of their regular books of accounts is mandatory. And whose gross turnover doesn't exceeds tax audit turnover required to offer their income as per section 44AD and no need to maintain regular books of accounts. In case they want to offer lower income than minimum income prescribed in section 44AD is required to maintain regular books of accounts as well as if their gross total income exceeds basic exemption limit than required to make tax audit.
So if the assessee offering lower income than section 44AD income then must and should be required to maintain regular books of accounts. And only in the case their gross total income exceeds basic exemption limit then only required to make tax audit.
Thus according to your question above in case your assessee i.e who has gross turnover of Rs. 1 lac and offering income lower than 8% and his gross total income exceeds basic exemption limit then required to make tax audit.
Note: Upto A.Y 2010-11 those who are not liable for tax audit and liable for offering their income as per section 44AD or 44AE or 44AF but they offering lower income than prescribed under such sections then must and should be required to make tax audit u/s 44AB.
But from A.Y 2011-12 the section 44AB, 44AD and 44AF has been amended from A.Y 2011-13 section 44AF merged with section 44AD and section 44AF eliminated and section 44AD amended as those who offering lowering income than section 44AD should be required to maintain regular books of accounts and required to make tax audit if their gross total income exceeds basic exemption limit.
So upto A.Y 2010-11 answer to for your above question is Yes; And from A.Y 2011-12 answer to for your above question is Yes, only if the gross total income exceeds basic exemption limit and No, if the gross total income doesn't exceeds basic exemption limit.
For your clarification: Is you now clearly under stand the sections and provisions of 44AB and 44AD. Still if you have any doubt then ask your doubt or still you have confusion regarding this classification then please provide your email id i will mail you explanation of this with some examples for your better understanding because of providing of examples here is not possible because of improper display and visuabiliy.
So if you have any doubt then ask your doubt for clarification or still if you have confusion then please provide your email ID.
OM SAI SRI SAI JAI JAI SAI
According to the section 44AB. For the business assessess whose total turnover exceeds Rs. 1crore for A.Y 2013-14 are required to make tax audit of their books of accounts and for professionals tax audit limit turnover is Rs. 25 lacs. So whose turnover exceeds tax audit limit then should be required to make tax audit of their books of accounts. I.e means who are making tax audit should be maintain regular books of accounts as per section 44AA. As well as those who are not mandatory for tax audit and required to offer their income according to section 44AD or 44AE but they offering lower income than prescribed under such sections required to maintain tax audit.
According to the section 44AD: All business assessee who are not liable for tax audit must and should be required to offer their income from business is minimum of 8% on gross turnover for tax purpose and those who are offering their income as per section 44AD need not to require maintain regular books of accounts. And those are liable to offer their income as per section 44AD but they offering lower income than prescribed in section 44AD then required to maintain regular books of accounts as per section 44AA and if their gross total income exceeds basic exemption limit then required to make tax audit as per section 44AB.
Note: Transport operators doesn't comes under section 44AD they comes under section 44AE.
So according to the above provisions whose gross turnover exceeds tax audit turnover limit then Tax audit of their regular books of accounts is mandatory. And whose gross turnover doesn't exceeds tax audit turnover required to offer their income as per section 44AD and no need to maintain regular books of accounts. In case they want to offer lower income than minimum income prescribed in section 44AD is required to maintain regular books of accounts as well as if their gross total income exceeds basic exemption limit than required to make tax audit.
So if the assessee offering lower income than section 44AD income then must and should be required to maintain regular books of accounts. And only in the case their gross total income exceeds basic exemption limit then only required to make tax audit.
Thus according to your question above in case your assessee i.e who has gross turnover of Rs. 1 lac and offering income lower than 8% and his gross total income exceeds basic exemption limit then required to make tax audit.
Note: Upto A.Y 2010-11 those who are not liable for tax audit and liable for offering their income as per section 44AD or 44AE or 44AF but they offering lower income than prescribed under such sections then must and should be required to make tax audit u/s 44AB.
But from A.Y 2011-12 the section 44AB, 44AD and 44AF has been amended from A.Y 2011-13 section 44AF merged with section 44AD and section 44AF eliminated and section 44AD amended as those who offering lowering income than section 44AD should be required to maintain regular books of accounts and required to make tax audit if their gross total income exceeds basic exemption limit.
So upto A.Y 2010-11 answer to for your above question is Yes; And from A.Y 2011-12 answer to for your above question is Yes, only if the gross total income exceeds basic exemption limit and No, if the gross total income doesn't exceeds basic exemption limit.
For your clarification: Is you now clearly under stand the sections and provisions of 44AB and 44AD. Still if you have any doubt then ask your doubt or still you have confusion regarding this classification then please provide your email id i will mail you explanation of this with some examples for your better understanding because of providing of examples here is not possible because of improper display and visuabiliy.
So if you have any doubt then ask your doubt for clarification or still if you have confusion then please provide your email ID.
OM SAI SRI SAI JAI JAI SAI
07 April 2013
However simple answer to your question. Eventhough their turnover is Rs. 1 lacs and offering their income lower than 8% and maintaining regular books of accounts. Only in the case of gross total income exceeding basic exemption limit then required to make tax audit otherwise not required.
In one word those who are liable to offer their income of 8% minimum on their turnover but offering lowering income than 8% must and should be required to maintain regular books of account as per section 44AA. And liability of the tax audit is depending on the gross total income of the assessee ( i.e if their gross total income exceeds basic exemption limit then must and should be required to make tax audit other wise not required).
OM SAI SRI SAI JAI JAI SAI
In one word those who are liable to offer their income of 8% minimum on their turnover but offering lowering income than 8% must and should be required to maintain regular books of account as per section 44AA. And liability of the tax audit is depending on the gross total income of the assessee ( i.e if their gross total income exceeds basic exemption limit then must and should be required to make tax audit other wise not required).
OM SAI SRI SAI JAI JAI SAI
07 April 2013
May i know where are you from? i.e is you from Andhra pradesh or you know the language of Telugu then you can call me at : 8985063892 if you want to clarify your doubt in this regards because of oral explanation gives more clarity than theory explanation. So i am from Andhra pradesh thus if you know Telugu then if you want may contact me at the above number.
OM SAI SRI SAI JAI JAI SAI
OM SAI SRI SAI JAI JAI SAI
Message likes :
2 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Should I include march foreign salary received in April in my income for FY 2023-24?
- Tax on capital gains revoked us 54f
- Inventory of finished goods
- Confusion around Form 26QB fields
- Sale of property furniture sale
- Applicability of Ind As to associate of associate
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- Clarification on Documentation of Paid-Up Capital Contribution by Directors
- Refund of AY 22-23
- Disallowance of Section 43B(h) to sez units
- Last year input claim shown in gstr9
- GST Registration Cancellation books of accounts asked by officer
- TDS Deduction Online Learing Platform
- Point (III) 9 of GSTR-9C
- As per our records, find the below outstanding demand(s)* and interest payable u/s 220(2):
- Regarding transaction th. credit card
- HSN Details in IFF/GSTR-1 & in GSTR 9
- MIS MATCH OF INVOICE NUMBER
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
Trending Online Classes
CAclubindia
