APPLICABLE OF TAX AUDIT U/S 44AB

AUDIT OF ACCOUNTS OF CERTAIN PERSONS CARRYING ON BUSINESS OR PROFESSION.

Every person, -   (a) Carrying on business shall, if his total sales, turnover 711 or gross receipts, as the case may be, in business exceed or exceeds forty lakh rupees in any previous year, or

(b) Carrying on profession shall, if his gross receipts in profession exceed ten lakh rupees in any previous year, or

So as per above defination the turnover counted separately for sales and business , and the business which reach at specified limited has to be audited. no need for tax audit if the receipt or sale not reach at specified limit above said

Dear Trilochan,

Case 1 - Business 30L & Profession 14 L

Since receipts from Construction business (assuming Civil Construction) are less then 40 Lakhs, then Provision of Presumptive taxation will apply u/s 44AD & Income will be computed @ 8% of Gross receipts...

Now if u r ready to show ur Income @ 8% then no need to get Tax Audit done in respect of Construction business...Tax Audit will be required only for Professional firm...

But if u challenge that ur Income of Construction Business is less then 8% of Gross receipts then, u r required to get Tax Audit of business as well as profession.. 

Case 2 - Business 35L & Profession 8L

Tax Audit is not required neither for business nor for profession since the individual threshold limit for business(40L) as well as profession(10L) has not exceeded..

Mr.Amir i have a doubt....

If it is a business not covered u/s 44AD,AE,AF... then 35L and 8L ??? Tax Audit - yes or no....

Please clarify....

Dear Balaji,

Business receipts = 35 Lacs (Not covered by Presumptive Taxation)

Professional Receipts = 8 Lacs

Tax Audit is not required.............

Mr.Amir i'm still not clear...

Let me put this way...

A properietor...carries on two business....both not covered under presumptive tax basis....

T.O. - B1 - 28 lacs....B2- 20lacs.....

Tax Audit required to be done or not.....Is Tax audit should be done only if the T.O of a business or Individual exceeds Rs.40lacs????

Confused??.<<< @ @ !!! 

Dear Balaji,

If Both are businesses then Tax Audit will be applicable...

I gave the answer in respect of 1 business & other is profession...

Yes.... sorry...... i didn't see that wordings.......

Thank You very much.....dear brother........

Dear Trilochan,

If the Turnover of business is Rs. 35 Lacs and the gross reciepts of profession are Rs. 14 Lacs, the books of account of both the concern need to be audited as Section 44AB states that:

Every Person -

a. carrying on business shall, if his total sales turnover, ...................or,

b. carrying on profession shall, if his gross reciepts in profession.......

c. ........................................................................................................................

get his accounts of such previous year audited by an accountant............

Therefore if any of the conditions out of a, b or c are satisfied the assessee has to get all books of accounts from all business or professions audited. Even the guidance note on tax audit issued by the ICAI supports this view......

if both are business then liable for tax audit .

What if one business if retail trade having turnover of Rs.35 lacs   ( in which 44AF is adopted)  and another is a small manufacturing unit having turnover Rs. 6 lacs. Then  will tax audit come. 

Pls reply

Dear Sir,

No, becos this buget has proposed to increase the Turnover limit to 60 Lacs.

If we modify ur question as per the new limits then Yes, tax audit will be required. (i:e 55 Lacs & 6 Lacs)

1st case : business 30 lacs and profession 14 lacs than tax audit is applicable only to profession and not business

2nd case : business 35 lacs and profession 8 lacs than tax audit is not applicable

I'm engaged with business of stock broking firm & my net profit/loss is less than Rs 4000000 but my turnover is more than Rs 4000000 so am I liable for tax audit

The original question was nicely answered by Amir. But the point which i found in discussion that in case of preassumption basis u/s 44AD or 44AE shall be take the turnover of 2 businesses seprately or collectively.

I want Amir's reply on it.