Sec 44ad

This query is : Resolved

SHILPA MAHAJAN (Querist)
Follow

19 February 2013 There is some confusion regarding provisions of Sec 44AD.
If there is loss or profit is less than 8% of gross receipts,in business of an individual and his total income is less than maximum exemption limit. Will the provisions of Sec 44AD apply to him?

Guest

Guest (Expert)

19 February 2013 IN CASE OF INDIVIDUAL, IF HIE/HER INCOME DOES NOT EXCEED THE LIMIT OF TAXABILITY OF INCOME, HE/SHE DOES NOT REQUIRE TO CARRY OUT THE AUDIT U/S 44AD OF FINANCIAL STATEMENTS EVEN THOUGH HIS/HER NET PROFIT REMAINS BELOW 8% OF GROSS RECEIPT /TURNOVER.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
Follow

19 February 2013 Yes, applicable; for you clarification below explanation:

As per section 44AD those who are not liable for tax audit u/s44AB should be offer their income minimum of 8% on their gross turnover/receipts. And those who are offering their income u/s44AD need not to maintain books of accounts(however those liable to maintain books statutory as per any other act should be maintain). And those who want to offer their income lower than minimum prescribed u/s44AD is required to maintain books of accounts and has to make tax audit of their books u/s44AB if their total income exceeds basic exemption limit. I.e section 44AD providing offering of lower income than 8% but required should be maintain of regular books of accounts and 44AB tax audit if total income exceeds basic exemption limit. So section 44AD applies but offering income is lower than minimum prescribed at section 44AD.

OM SAI SRI SAI JAI JAI SAI

Upgrade to CAclubindia Pro. Subscribe Now!

Nikhil Kaushik

Nikhil Kaushik (Expert)
Follow

19 February 2013 Dear Shilpa,

Section 44AD is a provision for reducing the compliance burden on small businessmen/ professionals.

Under the section the businessmen may offer 8% of his gross income as profit and pay tax on the same. There won't be need to maintain any additional books etc.

However, if the assessee is of the view that his profit is less than 8% of the total revenue or that he is incurring loss, then he/she has the option of preparing detailed books of accounts and gets his books audited under 44AB.