Breakage of 44ad

Page no : 2

CA Aakarsh Jain (CA) (10234 Points)
Replied 03 January 2022

Yaa u r right but it shows the errors and also have a user friendly interface to correct those errors

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (161002 Points)
Replied 04 January 2022

I wonder why you want to invite audit liability for next five years, by opting out from Sec. 44AD in this year.

Audit is not mandatory for this year, but error may trigger IT query if future.

Even if you declare income at 6/8% of the turnover under sec. 44AD, the total income would be below 5 lakhs, as such tax liability after rebate will be Nil...

1 Like

Jyoti Narang (Kkk) (1202 Points)
Replied 04 January 2022

If turnover is 68 lacs the profit would be 545000 approx at 8 % and as per records party is having 2.35 lacs profit only so they are saying y we should pay tax if our income is below 5 lacs .

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (161002 Points)
Replied 04 January 2022

Bank transactions can be declared at 6% margin.

Make them aware about tax audit liabilities to be faced for next 5 years.

1 Like

Neha sharma (-) (1257 Points)
Replied 05 January 2022

This is what Section 44AD(4) has to say

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)

It clearly says that if a person opts out of provisions of this section, it would be mandatory for him to get his books audited for the next 5 years irrespective of whether the income is taxable or not.

1 Like

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (161002 Points)
Replied 05 January 2022

Please read difference between sub sec. 44AD(4) & sec. 44AD(5)....

Liability of audit is specified u/s. 44AD(5)...

2 Like

Aarti Maurya (Student) (3053 Points)
Replied 10 January 2022

As per sec 44AD of income tax act a sum equal to 8% or 6%(if gross receipts are from account payee cheque or electronic clearing system) of TOTAL GROSS RECEIPTS should be declared in his return of income and that shall be deemed to be the income.

debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 10 January 2022

Section 44AD(4) will attract the year when the assessee declares the profits less than 8% or 6%. The taxpayer will not be eligible to opt for a presumptive income scheme for the next five years