Saving Tax under Sec 80C & Escaping Tax Audit

Others 1146 views 5 replies

Niraj Kumar

Business

29 Points Posted on 30 October 2010

hi,

I am proprietor of a firm with an annual turnover/sales of Rs. 40 lacs. As per section 44 AD for AY 2011-12, I am not required to get my firm audited if I declare my net profit to be 8% or more. But the profit margins in my business are only around 6%. According to the law (as I get it), if I want to declare my profit as 6%, I need to get my file audited, which would cost atleast Rs. 5000 (audit fees). Is there any way out to escape from the tax audit and also save taxes.

On top of that, I have heard that proprietary firms which are not audited can't get benefit under Sec. 80C, i.e, even if I declare my profit to be 8% on Rs. 40 lacs, I'll have to pay IT on Rs. 3,20,00 - Excempetion of Rs. 1,60,000. I am not allowed to save upto Rs. 1 lacs under Section 80C. Is this true or am I going wrong somewhere .. !!

Thanks in advance

Replies (5)

Ritin Maheshwari

26 Points Posted on 30 October 2010

If u do not opt for sec. 44AD then u have to get your accounts audited. There is no other way of escaping tax audit in case u dont opt for sec. 44AD. But u will definitly get benefit of deductions of sec. 80C or other deductions u/s 80. A proprietory and HUF gets benefit of section 80C while computing net total income.

Niraj Kumar

Business

29 Points Posted on 31 October 2010

Can I also claim benefits for rent payment under Sec 80GG

Ritin Maheshwari

26 Points Posted on 01 November 2010

U can claim every deductions except from 80HH to 80 RRB

Alok Siddapur

Consultant

229 Points Posted on 27 December 2010

According to sec 44AD, only provisions contained in sec 28 to 43C shall not apply to 44AD. Hence you can claim deduction under 80C. If you have any unabsorbed business loss it can be set off against your income from business for the AY 11-12.