Very very urgent

Tax queries 857 views 6 replies

manik

ca in practice

420 Points Joined May 2007

as per the provisions of sec 44AD:

i) The scheme is applicable for any business (excluding a business already covered under Sec. 44AE) which has a maximum gross turnover /gross receipts of 60 lakhs.

ii)The presumptive rate of income is prescribed at 8% of gross turnover /gross receipts.

iii)An assessee with turnover below60 lakhs, who shows an income below the presumptive rate prescribed under these provisions, in case his total income exceeds the taxable limit, required to maintain books of accounts and also get them audited

my question is" if a partnership firm doing garment trading is having a turnover of 30 lakh with g.p. of 9.5% and a n.p. of 0.5%" ( all genuene)

will it be covered under 44 AD? yes or no

what will be its tax liability?

if it is covered under 44AD then , whether it is attracted to scrutiny as the n.p i..e 0.5% is quite low to the prescribed 8%?

whtas the way out?

Replies (6)

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

sec 44AD covers civil contractors,

CA Yatin Bansal

ACA B.com CS(Inter)

196 Points Joined November 2010

Yes It is covered under section 44AD. And If u have prepared books of accounts then take no tension. Just get them audited but otherwise there may be a problem..

SUNIL GARG

CHARTERED ACCOUNTANT

175 Points Joined June 2009

Dear Manik,

From AY 2011-12, Section 44AD covers all the business except truck hiring u/s 44AE. Earlier it used to cover only Civil Construction Work.

Now, in your case, being a pertnership firm engaged in trading, you are covered u/s 44AD.

Since you are showing your income less than 8% i.e. only 0.5%, you are required to get maintain the books u/s 44AA and also to get the account audited u/s 44AB.

Moreover, it is not compulsory that your case will come under Scrutiny, but if it comes then you will have to show the Tax Audit Report u/s 44AB as well as the books of account.

Regards,

CA. Sunil Garg.