Itr form

Since your profit is below 8% on turnover, your accounts are subject to tax audit. hence approach a chartered accountant for filing your return of income.

Thanks

CA Gokul Raj

Hi Vinod,

Tax audit is required where profits are less than 8% of the gross receipts or turnover and the income exceeds maximum amount not chargeable to tax.

If proprietorship firm, no tax audit is involved in your case.

ITR 4 is to be submitted.

Section 44AB: Audit of Accounts:-

1. Business: Gross Receipt/Turnover exceeds Rs.1,00,00,000; or
2. Declaring lesser Income than as prescribed u/s 44AD.

Section 44AD: Computing Profits and Gains of Business on Presumptive Basis:-

1. Gross Receipt/Turnover is less than or equal to Rs.1,00,00,000; and
2. Profit and Gains of Business (Higher of following)

1. 8% of Gross Receipt/Turnover; or
2. Self-Declared Profit.

Your, Gross Receipt = Rs.20,00,000 (less than Rs.1,00,00,000), so Audit u/s 44AB is not compulsory.

But if you want to declare your profit Rs.1,00,000 (i.e. 5% of Rs.20,00,000) which is less 8% (i.e. Rs. 1,60,000) of Gross Receipt (Rs.20,00,000), minimum profit u/s 44AD.

So, you have to get your Account Audited and ITR-4 is to be submitted.

But, according to me you should go for Section 44AD and show your Income Rs.1,60,000 (8% of Rs.20,00,000).

As its (Rs.1,60,000) is less than Basic Exemption Limit of Rs.2,50,000 (minimum), so there will be No Tax Liability on you and you need not to get your accounts audited and also you can file ITR-4S (simplest one). ITR-4S is as simple as you can file yourself.

Here, I am providing a link of Income Tax Calculator for AY 2016-17 to compute Income Tax u/s 44AD and also attaching ITR-4S (AY 2015-16) for more clarity  and understanding.

https://www.dropbox.com/sh/j3frxwk127vwk44/AACfYHr4kpfJskaIvFNZDAyBa?dl=0

You can show Profit upto Rs. 2,70,000, even if there is no Savings or Investments under 80C,80CCC and 80CCD(1).

As, 250000 (Basic Exemption) and Rs. 20,000 (for Tax Relief u/s 87A upto Rs 2,000, subject to conditions).

For Deduction u/s 80C, there must be actual Savings, Investments or Expenses as per applicable terms and conditions u/s 80C.

Yes, if there is actual Savings or Investments as per Sections 80C, 80CCC or 80CCD(1), you can show profit upto Rs. 4,20,000 without any Tax Liability.

Kindly download the Income Tax Calculator for AY 2016-17, from th following link and put values in that, you will get solution.

/share_files/income-tax-estimation-for-ay-2016-17-69441.asp

Thanks & Regards

Rohit Goyal