44AD & 44AB: Tax Audit Rules Explained

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This discussion clarifies tax audit requirements under sections 44AB and 44AD for businesses. If your turnover is below ₹1 crore and profit margins are low (under 8%/6%), you likely don't need a tax audit and can file a normal return. For turnovers between ₹2 crore and ₹3 crore, a normal return without audit is possible if cash receipts and expenses are below 5% of the total, even with lower profit margins.

CA Nidhi Kanabar

CA Nidhi Kanabar (Querist)
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17 June 2024 HI,
MY CLIENT IS CARRING A BUSINESS AND WHOSE TURNOVER LESS THAN 1 CRORE IN P.Y 2023-24 ALSO PROFIT % IS LESS THAN 8%/6% WHETHER HE HAS TO DO TAX AUDIT IN P.Y 2023-24 OR SHALL HE FILE NORMAL RETURN IN JULY WITHOUT TAX AUDIT
IF TAX AUDIT THEN APPLY THEN UNDER WHICH SECTION HE HES TO DO TAX AUDIT

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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17 June 2024 Whether presumptive assessment u/s. 44AD was opted in any preceding 5 years?

CA Nidhi Kanabar

CA Nidhi Kanabar (Querist)
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17 June 2024 NO
I HAVE NEVER APPLIED FOR 44 AD IN ANY PREVIOUS FINANCIAL YEAR

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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17 June 2024 Yes, in that case the assessee can file normal return without tax audit liability.

CA Nidhi Kanabar

CA Nidhi Kanabar (Querist)
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17 June 2024 suppose My client has carrying business and whose turnover is 2.75crore more than 2 crore but less than 3 crore and whose cash receipt does not excess 5% if the total receipt but profit % is less than 8%/6% shall he need to file ITR under tax audit or normal without Tax audit?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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17 June 2024 If both cash receipts & cash expenses are less than 5% of corresponding total receipts as well as total expenses; then he can file ITR under normal assessment, without tax audit.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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30 August 2024 Good luck.

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