The assessee can opt for presumptive taxation u/s 44ADA. Clause (c) of section 44AB, inserted by the Finance Act 1997 w.e.f. Section 44AB gives the provisions relating to the class of taxpayers who are mandatorily required to get their accounts audited from a chartered accountant. Copyright © TaxGuru. 30th September of the relevant assessment year. 12(a) and (b) of Form 3CD Para No. Clause (b) If the assessee is carrying on profession and his gross receipts exceed twenty five lakh rupees in the relevant previous year. In other words for a normal business who has not opted for declaring profit under 44AD (presumitive income) even if it is less than 8% 44AB(e) may not be applicable as 44AD(4) is not applied. (b) in the case of a person who carries on business or profession, but not being a person referred to in clause ( a ), be in Form No. FORM NO. CLAUSE 8 : Indicate the relevant clause of section 44AB under which the audit has been conducted a. This was accompanied by a amendment in Explanation to Sec 44AB. How much? 3CD.] Well i have come across different views on this Issue…, itatonline.org/articles_new/demystifying-applicability-of-tax-audit-u-s-44ab-of-the-income-tax-act-1961/. So, first of all, let us read what the bare act has to say: (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year, Provided that in the case of a person whose—, (a) aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent of the said amount; and. 3CA and Form 3CD. 1 crore. In this case , assessee has to get his books of account audited as per provisions of sec 44 AD [1]. Relevant Clause of 44AB: Description: Clause (a) In case the assessee is carrying on business and his total sales, turnover or gross receipts as the case may be, exceeds one crore in the relevant previous year. Please go through and let me no , if there is any error or omissions. That is in FY 2015-16, if you have opted 44AD and not opted in FY 2016-17 ,then 44AD(4) applies ,meaning thereby tax audit is applicable per section 44AD(e). According to third proviso to section 44AB, if a person is required by or under any other law to get his accounts audited, then he need not get his accounts audited again to comply with the requirement of section 44AB. Advertisement. 94/2020-Central Tax, Removal of Director Under Companies Act, 2013 with Notice & Resolution formats, GST Moving Towards Inspector Raj……. Sir agar mera turnover 1.26 crore hai and Profit ratio 3% hai and all receipts cash then audit under which section. Difficult to Genuine Tax Payers, Discussion on GST Notification No. In this scenario, person will not require to audit as he satisfy condition stated in  Sec 44 AD [1]. As per Section 44AB of the Income Tax Act, 1961, every person carrying on business is required to get his accounts audited , if his total sales, turnover or gross receipts in business exceeds Rs. Again his total sales, turnover or gross receipts is above Rs. In such case, there are two possibilities as below : ‘a] His total profit or income for that business which is eligible business and person is eligible assessee, is more than or equal to 8 % of 6 % [ if his gross total turnover or receipts recd in banking mode] . shows profit less than 8% or 6%) then he cannot claim benefit u/s 44AD(1) for that AY and next 5 AYs. 2nd Para First line is incorrect it should be “With effect from 01/04/2020, that is from assessment year 2021-22” instead of “With effect from 01/04/2020, that is from assessment year 2020-21”. Under section 44AB of the Income-tax Act, 1961, it is obligatory for certain specified persons, carrying on business or profession to get their accounts audited by an ‘accountant’ and submit a copy of the ‘audit report’ in prescribed form (Form No. The examination is conducted to ensure that the taxpayer has properly maintained the books of accounts and other records. [ that above Rs. However GST Audit will be applicable if registered under GST (GST Audit threshold limit being Rs 2 crore). 1.5 crores. I always believe that any analysis should begin by reading the bare act. This is the perfect analysis of the 2 sections. 5 crores for the tax audit is inserted below clause (a) to section 44AB. The new proviso to section 44AB providing the enhanced turnover limit of Rs. (b) aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent of the said payment, this clause shall have effect as if for the words “one crore rupees”, the words “five crore rupees” had been substituted; or, (b) carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year; or, (c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or, (d) carrying on the profession shall, if the profits and gains from the profession are deemed to be the profits and gains of such person under section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or. The penalty shall be lower of the following amounts: (a) 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such year or years. AY 20-21). Maintained by V2Technosys.com, Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), Section 44AB: An Analysis of Tax Audit provisions after Finance Act, 2020, Summary of GSTR 3B Compliance post the 40th GST Council Meeting (Due dates, Interest and Late fees), Bonafide switch from Percentage completion to Project completion method allowable, CIT cannot ask AO to look into issues not within the purview of limited scrutiny, Challenge to vires of Circulars & Constitutional Validity of Section 9(a)(ii) of Direct Tax Vivad se Vishwas Act, Due Dates as per Income Tax Act 1961 expiring on 31st December 2020? 44AB(a) Business Turnover Exceed 1 crore 44AB(b) Professional Gross receipt exceed 50 lacs 44AB(c)‐i Income less than Deemed income u/s 44AE 44AB(c)‐ii Income less than Deemed income u/s 44BB 44AB(c)‐iii Income less than Deemed income u/s 44BBB 44AB(d) for section 44ADA 44AB(e) for section 44AD 44AB(3) Audited under any other law Persons like company or co-operative society are required to get their accounts audited under their respective laws. Just Check up before Panicking, Extend Income Tax, Companies & CGST Act compliance due dates, Provisions for modifying PAN based IEC introduced, Companies (Compromises, Arrangements & Amalgamations) Second Amendment Rules, 2020, Disqualification, Striking off And Cancellation of DIN, Changes in GST Rules relating to Registration, ITC Returns and E Way Bills, Practical issues on ITC after Notification No. The bare Act and then comes out of it their respective laws applies in case... With the audit of accounts of certain individuals clause 44AB ( e ) which again is a debatable topic avoid. I ] to Sec 44 AD [ 1 ] provisions applicable to him the clause a and b of section 44ab which is purview! During the previous year does not exceeds 5 % of such payments % total payments, 1961, by Finance. 94/2020-Central tax, Removal of Director under Companies Act, 2020 w.e.f receipts in the Income tax audit CBDT. 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Proviso in clause ( a ) and ( b ) a person carrying on profession: the gross!

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