Sec 44 ad

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AMIT KUMAR (Querist)
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11 October 2013 I am in retail trading business with a turnover around 25 lacs per year.

My firm is partnership firm.

I am not declaring my income 8% of gross receipts.

So please let me know Sec 44AD & audit is applicable for me or not.

Regards
Amit Kumar
delhi009@yahoo.co.in

CA Simarpreet Singh Gulati

CA Simarpreet Singh Gulati (Expert)
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11 October 2013 Section 44AD is applicable if your turnover for the year is less than Rs.1 crore, and you can declare your income at 8% of turnover without any need to maintain books of accounts.
If your turnover crosses Rs.1 crore, section 44AD is not applicable and you have to maintain books of accounts u/s 44AA and get it audited u/s 44AB. Audit is also required if your turnover is less than Rs.1 crore and you are declaring a net profit of less than 8%.

Thus, you will be required to maintain books of accounts and get it audited. I suggest that you declare income at 8% of turnover, which is Rs.2 lacs and does not fall in the tax bracket.

AMIT KUMAR

AMIT KUMAR (Querist)
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11 October 2013 my firm is partnership firm with a tax bracket of 30%.

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AMIT KUMAR

AMIT KUMAR (Querist)
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11 October 2013 kindly also let me know the date of applicability of section 44 ad new amendment.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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11 October 2013 According to the section 44AD the business assessee who has gross turnover of below Rs. 1Crore are required to offer their income as per section 44AD.As per this section minimum profit of 8% on gross turnover/receipts has to be offer and those offering their income according to this section need not to maintain regular books of account even as per section 44AA it is mandatory.

In case if the assessee liable for section 44AD but he offering lower income than 8% then required to maintain regular books of accounts and if their total income is exceeds basic exemption limit then required to make tax audit u/s 44AB. However for the case of partnership firms the remuneration payable/paid to partner's(if eligible) then such eligible remuneration shall be deduct from such minimum profit of 8%.

Now coming to your case and clarification,

You are the partnership firm so for your case basic exemption limit is ZERO so if you offering lower profit than 8% then you required to maintain regular books of accounts and has to make tax audit.

Note: Please compare the 8% minimum profit before deduction of partner's remuneration if any for your case(means for partnership firms)

The above provision shall applicable from A.Y 2011-12.

So please observe the above provision and analysis your case facts and take decision what action has to take further based on the available options now.

OM SAI SRI SAI JAI JAI SAI

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CA Pallav Singhania

CA Pallav Singhania (Expert)
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11 October 2013 Agree with Expert Tirumala ji,

Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax,
shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.

regards,

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V K Bajaj

V K Bajaj (Expert)
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11 October 2013 @Mr Amit

In brief you please maintain the books and get it audited is not MUST(but your option) for you. Audit will be MUST as and when turnover touches one crore.