Confusing in section 44ad

Was I not saying the same thing, what point made by me are you refering to, 'the spirit of the law thing?' or something else, please point it out to me..so that I can argue my point or correct myself.

The last para that you said concluding that audit is required in the given case as total income exceeds basic exemption limit. But I have highlighted the word claims meaning it depends upon assessee whether he wants to show 8% profit as business income or higher or lower. 

Remaining what you said is all correct.Despite the fact you said earlier you would have claimed 48000 but at the end you concluded that audit is required is incorrect.

Audit would not be required if income is shown at >= 8% of the turnover

I hope you got it what I meant and to what direction I was pointing it out

@ nisha yadava

Hi, In your case the assessee is subject to tax audit and maintenance of books of accounts as income declared is less than 8%(Sec 44AD). In your case total income exceeds basic exemption limit of Rs 2,50,000 and you are declaring lower income than the presumptive rate of 8%. Thus you are liable to ta audit U/s 44AB and as well maintainance of books of accounts u/s 44AA.

The total income  which is stipulated u/s 44AB rw 44AD is the total income chargeble to tax, rather there is only one total income as per tax i.e income taking into consideration all the heads under income tax act. There is no other total income which you can get doubt on , total income is defined in sec 2 and computed as per sec 5 and cannot be substituted with any other meaning. I agree with Rinkal.

But rather from the cost perspective and amount of work required, you can opt for 8% income and be done with your filing of return. I would rather suggest you to go through process of declaring income less than 8% if ur tax audit fee is not exceeding rs 9600, as it would be not feasable to opt for declaring lower income as tax audit cost can be high. So if tax audit and maintenance of books of accounts exceed rs 9600 u better take shelter of 44ad and declare 8% income and be done with it.

 

Regards,

Karthik V Kulkarni.

Since your total income exceeds min. basic exemption income (i.e. 250,000) due to salary income, you must show atlst 8% profit (i.e. 48,000) u/s 44AD if u want to avoid tax audit and maintenance of books and accounts. as per Section 44AD (5) 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

Bro... Just show as income from business without books of accounts as rs.40000/- and income from salary 700000...don't prepare profit and loss account for this small turnover. If turnover exceeds 10,00,000 then opt for so

Prepare extract of capital account for assessee and balance sheet thats enough....

Nisha yadav, Tax audit is not required evenif your income falls below 8% of Turnover provided your total income does not exceed basic exemption limit. Since you have salary income of Rs.7,00,000 which results your total income taxable.So in your case Tax audit is applicable. Correct me if i am wrong.Thanks

@ Saranraj Thangaraj:

Your suggestion is absolutely wrong. You are expecting to declare lower income than the presumptive rate and still you don't want to maintain books. You are violating the provisions of Sec 44AB and Sec 44AA rw Sec 44AD

@ Trilochan Mohapatra:

Tax audit will be applicable only if the assessee declares income below 8% and not if shown as per presumptive rate. The assessee still has an option to declare >=8% profit

 

@ Ms. Rinkal .. you cleared my all doubt .. thanku so much ..   here are some CA . they have just books knowlege and do not have practical knowledge. and they are giving wrong information.

P.S. english kamjor hai please co-operate 

Very nice answer RINKAL

Thanks but that can happen with anybody. Even when I become a CA there could be that I make a mistake. Mistakes can be made by anybody - A CA or a non CA. Only thing one needs to correct their mistake asap. I respect my profession a lot.

Hey sorry for getting back after so long, I got busy,

actually if you see that para, I wrote "as per figures provided...", and I meant that my conclusion is based upon the figures provided only. i.e. This para had no relation to advise I gave i.e. Show profit of Rs.48000.

So with reference to the figures provided by OP, the profit is lower than 8% of turnover (being Rs.40000) and income is breaching the exemption limit due to salary and hence my conclusion that tax audit is applicable.

Please check if I still need to correct myself based on my explanation above.

Thanks...

@ Anubhav :

Yes need to still correct yourself. Only and only if assessee chooses to opt for 40000 profit will there be tax audit. The assessee here have disclosed the actual profits earned and reading her below posts would not have suggested you to give such opinion

Even based on the figures, one needs to give an opinion which is beneficial for the assessee in all respects. 

Just a personal opinion

I gave my opinion and I also commented on technical aspect, to clear the point.

I want to strongly agree with you but can't, sorry!!.(Also hoping that my judgement is not cloudy)

Thanks though for taking the trouble to reply me back, you are fantastic.