44ad
This query is : Resolved
05 March 2016
If a person want to opt for presumptive income us 44ad
And he want to show his income. Then the audit performed by the auditor us 44AD will count in ceiling limit(60) of auditor or not.
Please give advice
05 March 2016
Less than 8%
14 July 2024
Under Section 44AD of the Income Tax Act, a taxpayer engaged in a business with a turnover up to Rs 2 crore can opt for presumptive taxation. Here’s how the audit requirement and its implications on the ceiling limit for audits (under Section 44AB) are addressed:
### Presumptive Income Scheme (Section 44AD):
1. **Audit Requirement:**
- Taxpayers opting for presumptive taxation under Section 44AD are not required to maintain regular books of accounts.
- However, if the income declared is lower than the presumptive income, the taxpayer is required to get the accounts audited under Section 44AB.
2. **Audit under Section 44AB:**
- If the taxpayer opts for Section 44AD and declares income as per the presumptive rates, but the income declared is less than 8% (or 6% in case of digital transactions) of the turnover or gross receipts, then an audit under Section 44AB becomes mandatory.
- The audit under Section 44AB is separate from the audit performed by the auditor under Section 44AD.
### Ceiling Limit for Audits:
- **Section 44AB Audit Limitation:** The ceiling limit of 60 audits under Section 44AB pertains to audits conducted under the provisions of Section 44AB, which includes audits for taxpayers who are not covered under presumptive taxation (like businesses with turnover exceeding Rs 2 crore or professionals with gross receipts exceeding Rs 50 lakhs).
- **Section 44AD Audit Exclusion:** Audits conducted under Section 44AD (if required due to income declaration being lower than presumptive income) are not counted towards the ceiling limit of 60 audits under Section 44AB.
### Conclusion:
The audit performed by the auditor under Section 44AD, if required due to income being lower than the presumptive income, does not count towards the ceiling limit of 60 audits under Section 44AB. These audits are distinct and serve different compliance purposes under the Income Tax Act.
If you are considering opting for presumptive taxation under Section 44AD or have specific circumstances related to tax audits, consulting with a tax professional or Chartered Accountant would provide tailored advice based on your situation and ensure compliance with tax laws.
If you have further questions or need clarification on any specific aspect, feel free to ask!
### Presumptive Income Scheme (Section 44AD):
1. **Audit Requirement:**
- Taxpayers opting for presumptive taxation under Section 44AD are not required to maintain regular books of accounts.
- However, if the income declared is lower than the presumptive income, the taxpayer is required to get the accounts audited under Section 44AB.
2. **Audit under Section 44AB:**
- If the taxpayer opts for Section 44AD and declares income as per the presumptive rates, but the income declared is less than 8% (or 6% in case of digital transactions) of the turnover or gross receipts, then an audit under Section 44AB becomes mandatory.
- The audit under Section 44AB is separate from the audit performed by the auditor under Section 44AD.
### Ceiling Limit for Audits:
- **Section 44AB Audit Limitation:** The ceiling limit of 60 audits under Section 44AB pertains to audits conducted under the provisions of Section 44AB, which includes audits for taxpayers who are not covered under presumptive taxation (like businesses with turnover exceeding Rs 2 crore or professionals with gross receipts exceeding Rs 50 lakhs).
- **Section 44AD Audit Exclusion:** Audits conducted under Section 44AD (if required due to income declaration being lower than presumptive income) are not counted towards the ceiling limit of 60 audits under Section 44AB.
### Conclusion:
The audit performed by the auditor under Section 44AD, if required due to income being lower than the presumptive income, does not count towards the ceiling limit of 60 audits under Section 44AB. These audits are distinct and serve different compliance purposes under the Income Tax Act.
If you are considering opting for presumptive taxation under Section 44AD or have specific circumstances related to tax audits, consulting with a tax professional or Chartered Accountant would provide tailored advice based on your situation and ensure compliance with tax laws.
If you have further questions or need clarification on any specific aspect, feel free to ask!
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