audit u/s 44ad
This query is : Resolved
16 March 2011
in a.y 2011-12 turnover is 2000000 and net profit is declared 100000 no other income. whether he req audit u/s44 AB. AS PER SECTION 44AD
16 March 2011
Audit is not compulsory if Gross Receipts is less than 60 Lakh and Net Profit is atleast 8% of Gross Receipts.
In ur case Net profit is less than 8 % so audit is required.
8% of 20 Lakh is 1.6 Lakh .
I suggest you to file return showing income around 1.70 Lakh.
No tax burden will be dere as the assessee gets exemption till 1.6 Lakh and he must have invested atleast Rs10000 in PPF/NSC/LIP/Mediclaim.
In ur case Net profit is less than 8 % so audit is required.
8% of 20 Lakh is 1.6 Lakh .
I suggest you to file return showing income around 1.70 Lakh.
No tax burden will be dere as the assessee gets exemption till 1.6 Lakh and he must have invested atleast Rs10000 in PPF/NSC/LIP/Mediclaim.
16 March 2011
In the case if Net profit is less than 8 % so audit is required u/s 44AB.
This audit is count under threshold limit i.e. 45 maximum limit.
This audit is count under threshold limit i.e. 45 maximum limit.
16 March 2011
i AM STILL cofusing someone say audit req , someone say not....
act say as per Sec 44 AD ASSESSES TOTAL iNCOME WILL BE MORE THEN TAXABLE INCOME IF HE DECLARING LOWER PROFIT ON HIS TURNOVER THEN HE WILL BE REQUIRED TO AUDIT U/S 44AB OTHERWISE NOT.
act say as per Sec 44 AD ASSESSES TOTAL iNCOME WILL BE MORE THEN TAXABLE INCOME IF HE DECLARING LOWER PROFIT ON HIS TURNOVER THEN HE WILL BE REQUIRED TO AUDIT U/S 44AB OTHERWISE NOT.
16 March 2011
if you want to show less then 8% profit then audit should be required u/s 44 AB.
if you are shows 8% or more profit then no need to condect audit u/s 44AB.
if turnover is more then rs.60 lakhs then tax audit should be require u/s 44AB.
if you are shows 8% or more profit then no need to condect audit u/s 44AB.
if turnover is more then rs.60 lakhs then tax audit should be require u/s 44AB.
17 March 2011
AS PER SECTION 44AD ASSESSES IS REQUIRED TAX AUDIT IF HIS TOTAL iNCOME WILL BE MORE THEN TAXABLE INCOME AND HE IS DECLARING LOWER PROFIT ON HIS TURNOVER .THEN HE WILL BE REQUIRED TO AUDIT U/S 44AB OTHERWISE NOT.
17 March 2011
Pawan ji I will explain the provision case wise:-
Case A - Turnover greaterthan equal to 60 Lakh - Audit Compulsory
Case B - Turnover less than 60 Lakh
It will have two sub-parts
(a)Assessee showing Net Profit Grater than equal to 8% of turnover - No need of tax audit. For e.g. 1.65 Lakh Net Profit if Turnover is 20 Lakh
(b)Net Profit less than 8% of Turnover - Tax Audit Compulsory
Case A - Turnover greaterthan equal to 60 Lakh - Audit Compulsory
Case B - Turnover less than 60 Lakh
It will have two sub-parts
(a)Assessee showing Net Profit Grater than equal to 8% of turnover - No need of tax audit. For e.g. 1.65 Lakh Net Profit if Turnover is 20 Lakh
(b)Net Profit less than 8% of Turnover - Tax Audit Compulsory
17 March 2011
Dear pulkitji
as per sec 44ad audit is compulsory if
(1)Net Profit less than 8% of Turnover
AND
(2)HIS TOTAL iNCOME WILL BE MORE THEN TAXABLE INCOME.
SO IF I DECLARED LESS THAN 8% PROFIT ON TURNOVER AND MY INCOME NOT EXCEEDS TAXABLE INCOME . THEN I WILL NOT REQ. TAX AUDIT AS PER SEC 44AD.
THAT'S MY POINT TOTAL INCOME NOT EXCEEDS TAXABLE INCOME.
as per sec 44ad audit is compulsory if
(1)Net Profit less than 8% of Turnover
AND
(2)HIS TOTAL iNCOME WILL BE MORE THEN TAXABLE INCOME.
SO IF I DECLARED LESS THAN 8% PROFIT ON TURNOVER AND MY INCOME NOT EXCEEDS TAXABLE INCOME . THEN I WILL NOT REQ. TAX AUDIT AS PER SEC 44AD.
THAT'S MY POINT TOTAL INCOME NOT EXCEEDS TAXABLE INCOME.
17 March 2011
Dear Pulkit And Ravi Ji Pawant Ji is correct in his assessment. He has declared income less than 8% and his taxable income is also below the taxable limit and therefore Tax Audit u/s 44AB is not required.
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17 March 2011
See point no 6 below.....
Sec 44AD: The salient features of the new presumptive taxation scheme are as under:
1. The scheme is applicable to individuals, HUFs and partnership firms excluding Limited liability partnership firms. It is also not be applicable to an assessee who is availing deductions under sections 10A, 10AA, 10B, 10BA or deduction under any provisions of Chapter VIA under the heading “C.—Deductions in respect of certain incomes” in the relevant assessment year.
2. The scheme is applicable for any business (excluding a business already covered under Sec. 44AE) which has a maximum gross turnover /gross receipts of 60 lakhs.
3. The presumptive rate of income is prescribed at 8% of gross turnover /gross receipts.
4. An assessee opting for the above scheme is exempted from payment of advance tax related to such business under the current provisions of the Income-tax Act.
5. An assessee opting for the above scheme is exempted from maintenance of books of accounts related to such business as required under section 44AA of the Income-tax Act.
6. An assessee with turnover below Rs. 60 lakhs, who shows an income below the presumptive rate prescribed under these provisions, in case his total income exceeds the taxable limit, required to maintain books of accounts and also get them audited.
7. The existing section 44AF is to be made inoperative for the assessment year beginning on or after 1st April, 2011.
Sec 44AD: The salient features of the new presumptive taxation scheme are as under:
1. The scheme is applicable to individuals, HUFs and partnership firms excluding Limited liability partnership firms. It is also not be applicable to an assessee who is availing deductions under sections 10A, 10AA, 10B, 10BA or deduction under any provisions of Chapter VIA under the heading “C.—Deductions in respect of certain incomes” in the relevant assessment year.
2. The scheme is applicable for any business (excluding a business already covered under Sec. 44AE) which has a maximum gross turnover /gross receipts of 60 lakhs.
3. The presumptive rate of income is prescribed at 8% of gross turnover /gross receipts.
4. An assessee opting for the above scheme is exempted from payment of advance tax related to such business under the current provisions of the Income-tax Act.
5. An assessee opting for the above scheme is exempted from maintenance of books of accounts related to such business as required under section 44AA of the Income-tax Act.
6. An assessee with turnover below Rs. 60 lakhs, who shows an income below the presumptive rate prescribed under these provisions, in case his total income exceeds the taxable limit, required to maintain books of accounts and also get them audited.
7. The existing section 44AF is to be made inoperative for the assessment year beginning on or after 1st April, 2011.
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17 March 2011
sec.44 AB or sec.44AD ??? which section applicable in this case ??
17 March 2011
According to me audit is required u/s 44AB.
17 March 2011
Under provisions of section 44AB, every person carrying on business is required to get his accounts audited if the total sales, turnover or gross receipts in business exceed 60 lakh rupees in the previous year. Similarly, a person carrying on a profession is required to get his accounts audited if the gross receipts in profession exceed 15 lakh rupees in the previous year.
Here turnover is Rs 20 Lakh then how sec 44AB will be applicable?
Here turnover is Rs 20 Lakh then how sec 44AB will be applicable?
17 March 2011
but sec.44AD will be applicable for Civil Construction buisness.
section 44AD has been introduces
for simplification of tax Computation relating to Civil Construction buisness.
section 44AD has been introduces
for simplification of tax Computation relating to Civil Construction buisness.
17 March 2011
Author is not write that this is the case of Civil Construction buisness.
17 March 2011
But since he is asking for applicability of Sec 44AD in the heading of his query it is to be presumed.
17 March 2011
HE WRITTEN - whether he req audit u/s44 AB. AS PER SECTION 44AD (PLEASE REFER LAST LINE OF QUERY?
17 March 2011
AD:
Case A - Turnover greater than equal to 60 Lakh - Audit Compulsory
Case B - Turnover less than 60 Lakh
It will have two sub-parts
(a)Assessee showing Net Profit Grater than equal to 8% of turnover - No need of tax audit. For e.g. 1.65 Lakh Net Profit if Turnover is 20 Lakh
(b)Net Profit less than 8% of Turnover but total income exceeds the taxable limit - Tax Audit Compulsory.
Here Net profit is below 8% and total income also below taxable limit, therefore assessee is not required to get the accounts audited and furnish a report of such audit as required under section 44AB.
Please tell do you agree with this or not?
Case A - Turnover greater than equal to 60 Lakh - Audit Compulsory
Case B - Turnover less than 60 Lakh
It will have two sub-parts
(a)Assessee showing Net Profit Grater than equal to 8% of turnover - No need of tax audit. For e.g. 1.65 Lakh Net Profit if Turnover is 20 Lakh
(b)Net Profit less than 8% of Turnover but total income exceeds the taxable limit - Tax Audit Compulsory.
Here Net profit is below 8% and total income also below taxable limit, therefore assessee is not required to get the accounts audited and furnish a report of such audit as required under section 44AB.
Please tell do you agree with this or not?
17 March 2011
yes dear agreed......
18 March 2011
But Sanjay Bhaiya I still have a confusion.
An assessee can make manipulation to show his total income less than taxable limit.
For e.g. Showing Net Profit @ 5 % on 30 Lakhs will make his income from PGBP = Rs. 150000 which is less than taxable limit.
So no audit is reqd.??
Pls correct me if I am wrong in my interpretation
An assessee can make manipulation to show his total income less than taxable limit.
For e.g. Showing Net Profit @ 5 % on 30 Lakhs will make his income from PGBP = Rs. 150000 which is less than taxable limit.
So no audit is reqd.??
Pls correct me if I am wrong in my interpretation
18 March 2011
Yes Dear Pulkit,
In this case No Tax audit is required.
In this case No Tax audit is required.
18 March 2011
But Pawan ji then Assessee can choose any % of profit.
Why will he choose 8 %. He can also choose 5,6 or 7% of Gross Receipts.
I request other experts to clarify this issue.
Why will he choose 8 %. He can also choose 5,6 or 7% of Gross Receipts.
I request other experts to clarify this issue.
18 March 2011
in my case turnover is related to all small business whose total turnover not more than Rs.60Lakh . Because from A.Y. 2011-12 sec 44ad applicable to all small business .
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18 March 2011
Dear Pulkit it is the section which provides this rule. It says if you declare profit less than 8% but your total income exceeds the maximum amount which is not chargeable to incometax. Then tax audit u/s 44AB will apply. Also i am mailing you pdf file for your reference.
18 March 2011
I also think so but As per sec 44ad if you are declaring income lower than 8% and total in not exceed taxable income. then tax audit is not required.
19 March 2011
@ Ravi Ji..
As per The Council General Guidelines, 2008, dated 8-8-2008, the audits conducted under sections 44AD, 44AE and 44AF of the Income-tax Act,1961 shall not be taken into account for the purpose of reckoning the "specified number of tax audit assignments."
As per The Council General Guidelines, 2008, dated 8-8-2008, the audits conducted under sections 44AD, 44AE and 44AF of the Income-tax Act,1961 shall not be taken into account for the purpose of reckoning the "specified number of tax audit assignments."
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19 March 2011
yes dear sanjay ji, audits conducted under sections 44AD, 44AE and 44AF shall not count in 45 tax audits limit.
11 April 2011
In my view Tax audit is not mandatory when 1) turnover below 60 lacs ,profit below 160000/-(in case of a male)
2) thease types of tax audits (44AD,44AE) are not included in ceiling of 45 audits.
2) thease types of tax audits (44AD,44AE) are not included in ceiling of 45 audits.
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11 April 2011
so I am completly agree with pawan singhal ji
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