Maintenance & audit of books of accounts

This query is : Resolved

Hardik Machchhar (Querist)
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06 December 2015 I run Transportation business by taking vehicles on rent and my turnover is 95 lacs & total income is 4,30,000.00 in F.Y. 14-15 then whether i have to maintain & gets books of account audited compulsory?

CA CS Jainam Shah

CA CS Jainam Shah (Expert)
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07 December 2015 Yes you have to maintain books of accounts and gets it audited. As your net profit is lower than 8% of your turnover you are audited under section 44AD.

CA CS LAVESH VASYANI

CA CS LAVESH VASYANI (Expert)
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07 December 2015 Audit is to be done u/s 44AB r.w.s 44AD.

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Hardik Machchhar

Hardik Machchhar (Querist)
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07 December 2015 Dear Experts, section 44AD read as following:

Section 44AD:-
1) Eligible Business:- following persons are not eligible to avail any benefit under section 44AD -
d. A person who is in the business of plying, hiring or leasing goods carriages.

So how it would be applicable to me?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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03 August 2024 In the context of Indian tax laws, especially with reference to Section 44AD of the Income Tax Act and the maintenance and audit of books of accounts for a transportation business, here is how it applies:

### **1. Applicability of Section 44AD:**

**Section 44AD of the Income Tax Act:**
- This section provides a presumptive taxation scheme for small businesses. Under Section 44AD, a taxpayer engaged in eligible businesses can declare 8% (or 6% for digital transactions) of their turnover as income and be taxed accordingly. This is applicable if the turnover is less than ₹2 crore and the business is not specifically excluded.

**Exclusions under Section 44AD:**
- Section 44AD does not apply to certain businesses, including those engaged in the business of plying, hiring, or leasing goods carriages. This means:
- **You are excluded** from the benefits of Section 44AD if your business involves renting vehicles or providing transportation services using rented vehicles.

### **2. Maintenance and Audit of Books of Accounts:**

**For Businesses Not Covered by Section 44AD:**
- Since Section 44AD does not cover businesses involved in plying, hiring, or leasing goods carriages, you need to follow the regular provisions applicable to such businesses.

**Books of Accounts:**
- **Maintenance:** You are required to maintain proper books of accounts and records in accordance with the Income Tax Act.
- **Audit Requirements:**

- **Section 44AB (Tax Audit):** If your turnover exceeds ₹1 crore (or ₹50 lakh if you are claiming benefits under Section 44AE), you are required to get your accounts audited by a Chartered Accountant under Section 44AB.
- **For FY 2014-15 (Assessment Year 2015-16):** Since your turnover was ₹95 lakh, which is below ₹1 crore, you might not be subject to compulsory tax audit for that financial year.

**Income from Transportation Business:**
- **Income Declaration:** If you are not covered under Section 44AD, you must declare your actual income based on the books of accounts maintained and file your tax returns accordingly.

### **Summary:**

1. **Section 44AD Exclusion:** As your business involves the hiring or leasing of goods carriages, you are excluded from the presumptive taxation benefits under Section 44AD.
2. **Books of Accounts:** You are still required to maintain proper books of accounts.
3. **Audit Requirements:** Based on the turnover of ₹95 lakh for FY 2014-15, you were not required to get your accounts audited as it was below the ₹1 crore threshold. However, you must comply with general accounting and tax filing requirements.

**Recommendation:**
- Always keep accurate records and consult with a tax professional or Chartered Accountant to ensure compliance with tax laws and audit requirements, especially if there are any changes or specific details about your business structure or turnover.