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Audit required or not?

28 December 2020

Dear sir/mam, if my sale in FY 19-20 is 40 lakh rupees and I am showing my net profit ₹ 2 lakh which is less than 8% and 6% then do I need an audit?

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20 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 28 December 2020

No you are not liable for tax audit as you are opting for presumptive taxation basis u/s 44AD which is 8% of turnover

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Ajay kumar sharma (63 Points)
Replied 28 December 2020

Turnover is less than 100 lakhs but as per section 44AB if assessee show lower profit which is required by section 44AD then it is compulsory to audit and maintain books of accounts.

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 28 December 2020

Section 44AD tells that if assessee turnover exceeds 1 crores rupees and he is showing lower profit then he is liable for tax audit and have to maintain books of accounts. But if his turnover not exceeds 1 crores rupees and showing lower profit then he is not liable for tax audit

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Sumit Shukla (378 Points)
Replied 28 December 2020

Required to conduct audit as the final profit is less than 6 or 8 percentage of turnover

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 28 December 2020

Yes you are right actually I'm confused between regarding audit of 44Ad and 44Ab now it's clear

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Smit Shah (524 Points)
Replied 28 December 2020

Yes absolutely you are liable for audit but as per my suggestion rather you may show it at 8% which 320000 and also if including other income and after taking general deduction your total income is less than 500000 then there will not be any tax liability and also you can get relief from auditing your books

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saurabh sawlani (2166 Points)
Replied 28 December 2020

Sir i am filing itr3 will it make any difference or do i have to audit??? is audit is mandatory to mr

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 28 December 2020

U should file itr4s

saurabh sawlani (2166 Points)
Replied 28 December 2020

But sir i am filling ITR 3 ...so sir what to do now?

Smit Shah (524 Points)
Replied 28 December 2020

Right you should file ITR 4

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saurabh sawlani (2166 Points)
Replied 28 December 2020

SIR MUJE ITR3 HI FILE KRNA HAI ITR4 NHI... OR MERA QUESTION BHI ITR3 K BASE PER E HAI.. OR ABHI TAK MERA CONCEPT CLEAR NHI HUA HAI... MTLAB KYA KRNA HAI... AGAR ME ITR4 KRTA HU TOH KYA HOGA OR ITR3 FILE KRTA HU TOH KYA HOGA... PLEASE SIR GUIDE KRO

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 28 December 2020

If u r opting for presumptive taxation then you should file itr4s otherwise for non presumptive taxation u/s 44ad you should file itr3

Sumit Shukla (378 Points)
Replied 28 December 2020

Sourav your opinion could also be correct

bijo scaria (Article Assistant) (22 Points)
Replied 02 January 2021

You are not required to get your book audited as per the recent amendment.

The audit is mandatory when the declared profit is less than 6 or 8 % as the case may be and the profit exceeds the basic limit. In this example, the audit is not mandatory because the declared profit is less than 2.5 lakh (i.e basic limit)

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