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Audit under 44AB

19 August 2017

Can you please tell me which section says that if we declare less than 8% we have to get books of accounts audited for the FY 2016-17?

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17 Replies

CA Prashak Kumar Goyal (Pratice) (192 Points)
Replied 19 August 2017

There is no such provision. Only thing is that you have to maintain books of account

Ganesh Dowlath (21 Points)
Replied 19 August 2017

Then no need for audit is it? Even if i declare less than 8 percent?

CA Prashak Kumar Goyal (Pratice) (192 Points)
Replied 19 August 2017

Turnover from business should not exceed 1cr

Luvish Jain (Tax Consultant) (507 Points)
Replied 19 August 2017

mr.ganesh look, if u r filing ITR u/s 44AD and showing profit less than 8% than audit is compulsory
and if u r filing ITR under normal provisions than you ll have to prepare books of accounts and have to fill profit and loss acc as well as balance sheet than you can show below 8% profit also...also provisions of 1cr and 2 cr needs to be lookout..

Vatsal Shah (38 Points)
Replied 19 August 2017

If shown less than 8% than compulsory audit for next 5 years also benefit of 44AD, unless income is below limit

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Vatsal Shah (38 Points)
Replied 19 August 2017

Benefit of 44AD not available for next 5 years

rama krishnan (12234 Points)
Replied 19 August 2017

if your total income is exceeding the taxable limit and if it's less than 8% of total turnover then audit u/s. 44AB is compulsory as per subsection (5) of section 44AD
correct me if iam wrong

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neeraj gupta (1138 Points)
Replied 20 August 2017

Agreed with Mr Rama Krishnan. 44AB(e) is the section applies. One minor addition, audit applies only if total income (all income heads) exceeds max exempt from tax.

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Ganesh Dowlath (21 Points)
Replied 20 August 2017

44AD new amended sub section 5 says audit is applicable for those subsection 4 applies but in sub section 4 it doesn't talk about declaring less than 8%. Hence i feel Audit not required if i won't opt for 44AD and declare less than 8%.

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neeraj gupta (1138 Points)
Replied 20 August 2017

Dear Mr Dowlath, I think the limit part is mentioned indirectly. Subsection 4 mentions the accordance to sub-section(1) and subsection(1) talks about the limit of 8%/6% depending upon nature of payment.

44AD (4)

"Where an eligible assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section (1) ..."

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rama krishnan (12234 Points)
Replied 20 August 2017

as per subsection 5 of 44AD, Those assessees who fall under subsection 4 of 44AD, they are required to maintain books as per 44AA and get audited as per 44AB

rama krishnan (12234 Points)
Replied 20 August 2017

which is nothing but the assessee who does not fall under 44AD section

CA Prashak Kumar Goyal (Pratice) (192 Points)
Replied 20 August 2017

@ RamaKrishnan Wrong interpretation

rama krishnan (12234 Points)
Replied 20 August 2017

43[[4] Where an eligible assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section [1], he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section [1].

[5] Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee to whom the provisions of sub-section [4] are applicable and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section [2] of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.]

assessees fall under only 2 categories. one who declares 8% of turn over under 44AD and the other under 44ad(4) which needs to be audited. it's my view. let's wait for experts advice