44AD applicability to newly incorporated Firm in 2022-23

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This discussion clarifies whether a newly incorporated firm in the 2022-23 financial year, with a turnover of Rs. 44 lakh and declaring profits below the presumptive tax thresholds (6% or 8%), is required to undergo a tax audit under Section 44AB. The consensus is that opting for Section 44AD is not compulsory. However, if the firm chooses not to opt for 44AD, maintaining books of account and undergoing a tax audit becomes mandatory.

jayesh khokhariya

jayesh khokhariya (Querist)
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20 September 2023 Firm having turnover of Rs. 44 lakh wants declare profit around to 1% so it is compulsory to go for audit u/s 44AB(a) as firm is newly incorporated in FY 2022-23 and filing first time income tax return as firm is declaring profit lower than 6%/8% as the case may be.

QUESTION 1).IS it compulsory to adopt 44AD as firm declaring profit lower than 6% and carried out audit under section 44AB.

2).maintenance of books of account is compulsory if firm want to file normal return without considering 44AD

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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20 September 2023 Not compulsory to opt for 44AD.
Tax audit not applicable in view of new firm.

RAJA P M

RAJA P M (Expert)
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21 September 2023 Yes, I agreed with Mr CA R SEETHARAMAN Sir.... 1. Not compulsory for 44Ad. But, If opt 44ad then profit must be 6%/8%.... 2. Yes, It's compulsory if You are not opting 44ad.

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