44 AB Audit

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This discussion clarifies the requirements for a tax audit under section 44AB for small businesses. Even if your turnover is below the basic exemption limit, a tax audit is generally not required. However, if your turnover is significantly higher (e.g., 80 lacs) and you are making a loss, while your taxable income might be below the exemption limit, maintaining books of accounts is still compulsory, and a tax audit may still be applicable depending on specific circumstances not fully detailed here.

Tony Sebastian

Tony Sebastian (Querist)
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30 March 2020 I have a small business. Turnover is 15 lacs. Net profit is less than 8% and below basic exemption limit. I don't want to disclose income as per section 44AD. I have no other income.

It says in the section that in case of an individual, 44AB is applicable if total taxable income is above the basic exemption limit. However, my teachers are of the opinion that i need to get the books audited.

I'm i required to get the books audited???

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CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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30 March 2020 Not required as your income is below basic exemption.

Spurto Consultancy Services

Spurto Consultancy Services (Expert)
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30 March 2020 No, tax audit wont be applicable.

Tony Sebastian

Tony Sebastian (Querist)
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30 March 2020 ok..thanks for the replies.
But, suppose my turnover was, say 80 lacs and the business is on loss. So, obviously, since it is a loss, the total taxable income is below the exemption limit. So, in that case too, i need not give my books for tax audit? Please give a reply for this too..

Spurto Consultancy Services

Spurto Consultancy Services (Expert)
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30 March 2020 No tax audit will be applicable.

swasti

swasti (Expert)
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31 March 2020 Tax Audit wont be applicable in either case. Though books have to be maintained compulsorily.