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Number of tax audit u/s44ab regarding

Ritesh (Asst.Mgr.) (164 Points)

01 May 2017

Dear Experts

A person has proprietorship business having Rs.1.5 crore of turnover during FY 2016-17.He is eligible for presumptive taxation u/s 44AD. But he doesn't want to pay 8% tax and wants to get his accounts audited,because his real profit will be less than 8%.

My query is:-

1. Whether the above audit by a CA will be counted within the ceiling limit of 60 audits as prescribed by ICAI ?

2.For FY 2016-17 tax audit threshold limit is Rs.1 crore.

3. I am confused about the ceiling of 60 tax audits i.e which categories of audits will be counted for ceiling purposes.

Please clarify.

Best Regards.

Ritesh

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5 Replies

(Guest)

for financial year 2016-17 that is for assessment year 2017-18

tax audit limit is 2CR

always better to show tax 8%

for profit below 8% audit has to done as per 44ab

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Prity Agarwal (CHARTERED ACCOUNTANT) (363 Points)
Replied 02 May 2017

1. Yes, the above audit shall be considered within the threshold limit of 60.

2. Tax audit limit has been increased to Rs. 2 crores from Rs. 1 crore.

3. All tax audits shall be considered for the limit of 60.

1 Like

Ritesh (Asst.Mgr.) (164 Points)
Replied 02 May 2017

Dear Prity Madam,I am not agreed with your view. Read the notification below as declared by ICAI:

Clarification for reckoning the “specified number of tax audit assignments” conducted under section 44AB of the Income-tax Act, 1961.- (13-12-2011)

Various statutes prevailing in India like DVAT,2004 requires the assessee to furnish an audit report in a form duly signed and verified by such particulars as may be prescribed under section 44AB of the Income-tax Act, 1961 i.e. Form 3CB/3CD. This had lead to the doubts as to whether such audits would be included in the ceiling of “specified number of tax audit assignments”.

Considering the same, the Council at its 311th meeting held on 8thand 9th November, 2011 clarified that audit prescribed under any statute which requires the audit report in the form as prescribed under section 44AB of the Income-tax Act, shall not be considered for the purpose of reckoning the specified number of tax audit assignments if the turnover of the auditee is below the turnover limit specified in section 44AB of the Income-tax Act, 1961. For instance audit under section 44AD, audit under DVAT, 2004 (for turnover between 40 to 60 Lakhs) etc. will not be considered for inclusion in the present limit of 45 audits.

As per your opinion ,if tax Audit limit is Rs.2 crore and above,then all other audits below Rs.2 Crore would be considered as audit u/s 44AD.So,Rs1.5 crore turnover audit falls u/s 44AD audit.Then how it will be included in limit of 60.Please go thru the above notification carefully and correct me if I am wrong.

Best Regards