Table of Contents
Is audit mandatory if profit less than 8?
From the example 3 and example 4 it is observed that where the assessee has turnover less than Rs 2 Crores and declares profit less than 8\%/6\% tax audit is applicable, where as in case the assessee has turnover between 2 Crs to 5 Crs, no tax audit is applicable even if he has declared profits less than 6\%/8\%.
Can we show more than 8\% profit in 44AD?
30 January 2014 The AO has no power to reject your claim if it is 8\% or more. But your increase in wealth/assets should not be more than the declared income.
Is tax audit required for 44AD?
Section 44AD is a presumptive taxation scheme that was introduced by Income Tax Law in order to ease the tax burden on small taxpayers or assessees. Individuals who come under the provisions of this scheme need not maintain or show books of account, nor are they required to get an audit performed on the same.
What is the tax audit limit for AY 2020 21?
According to the provisions of the income tax department, taxpayers are mandated to get their accounts audited if the sales, turnover or gross receipts of business exceed ₹ 10 crore. If a taxpayer is a professional, the limit was over ₹ 50 lakh in 2020-21 (assessment year 2021-22).
When Should accounts be audited?
Audit Requirements
| Tax Payer | Compulsory Audit required when |
|---|---|
| A person carrying on Business | If total sales, turnover or gross receipts are more than Rs. 1 crore |
| A person carrying on Profession | If gross receipts are more than Rs. 50 lakh |
What if actual income is more than presumptive income?
Note 1 : If the actual income is higher than the presumptive rate, i.e., higher than Rs. 1,000/Rs. 7,500, then such higher income can be declared. Note 2 : “Heavy Goods Vehicle” means any goods carriage having gross vehicle weight exceeding 12,000 kilograms.
How is profit calculated under section 44AD?
In case of a person adopting the provisions of section 44ADA, income will be computed on a presumptive basis, i.e. @ 50\% of the total gross receipts of the profession. In other words, total gross receipts from profession should not exceed Rs 50 lakh for a financial year.
How do I calculate 44AD income?
As per the provisions of Section 44AD, income will be computed on the basis of estimation at the rate of 8\% of gross receipts or total turnover of the eligible business for the previous year.
Do I need to get my business books audited?
IF THE INCOME HASN’T EXCEEDED THE BASIC EXEMPTION LIMIT THEN YOU NEED NOT GET THE BUSINESS BOOKS AUDITED. AUDIT IS ONLY NECESSARY IF YOU HAVE OPTED FOR 44AD SECTION IN ANY PREVIOUS YEAR OR HAVEN’T COMPLETED 5 YEARS FROM THE DATE YOU 1ST OPTED FOR 44AD AND NOW YOU ARE SHOWING PROFIT LESS THEN 8/6\% AND YOUR INCOME EXCEED THE BASIC EXEMPTION SLAB.
Can a company declare lower profit U/s 44AD without being audited?
If an eligible assessee declares profit as per section 44AD, then after 5 years it may declare lower profit u/s 44AD without getting its books of accounts audited. In this case he has to maintain books of accounts as per section 44AB if applicable.
Is tax audit applicable irrespective of profit or loss?
Thus, Tax Audit is not applicable irrespective of profit or loss. The Income Tax Department is expected to make an amendment to the turnover limit of Sec 44AD to resolve this loophole. Tax Audit under Sec 44AB (a) is applicable irrespective of the profit or loss.
What is tax audit under Section 44AB of Income Tax Act?
Tax Audit under Section 44AB of the Income Tax Act is the examination and review of the books of accounts of a taxpayer having income from business or profession. The taxpayer should appoint a practicing CA i.e. Chartered Accountant to audit the books of accounts.