44ad & partnership firm- inc<8% audit ? (Income Tax)

This query is : Open

( Author )
04 June 2012

Hello everyone,

suppose my client a firm has 200000 of turnover so 8% comes to 16000.

if it opts for 44AD then is audit mandatory because in 44AD it is mentioned that if income is <8% and income is more the maximum amount not chargeable to tax and for firms there is no limit for taxability of income ,

Anand Dubey

( Expert )
04 June 2012

yes mandatory , but you can further reduce the profit by paying partner's remuneration and interest to partners,then I think tax payable would be less than tax audit fee

Siddhartha Bhardwaj

( Expert )
04 June 2012

1. If you show income less than Rs. 16,000 then tax audit is mandatory.

2. If you show income of Rs. 16,000 or more then tax audit is NOT mandatory.

3. Further, you can claim deduction of partner's remuneration from such income.

CA Abhishek Singh

( Author )
04 June 2012

there are chances of misusing section 44AD becuase to deduct higher remuneration one will inflate the book profit and reduce the tax liability.

CA Abhishek Singh

( Author )
04 June 2012

there are chances of misusing section 44AD becuase to deduct higher remuneration one will inflate the book profit and reduce the tax liability.

CA Abhishek Singh

( Author )
04 June 2012

there are chances of misusing section 44AD becuase to deduct higher remuneration one will inflate the book profit and reduce the tax liability.