44AD -income tax act

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This discussion clarifies queries regarding Section 44AD of the Income Tax Act, focusing on the presumptive taxation scheme. It addresses situations where businesses opting for 44AD may need to undergo a tax audit under Section 44AB(e) due to turnover exceeding limits or profit margins falling below the presumptive rate. The advice confirms that a tax audit is applicable even if profits exceed 8% when turnover is below ₹1 crore, and explains the implications for businesses closing down mid-year or opting out of the 44AD scheme.

CA Nidhi Kanabar

CA Nidhi Kanabar (Querist)
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17 July 2023 Hello

Please clarify below my query
Financial year Return Filed under
2017-18 44AD- presumptive Scheme
2018-19 44AD- presumptive Scheme
2019-20 44AD- presumptive Scheme
2020-21 Audit -44AB(e)- 44AD(4)-As business Loss, turnover is approx 32 lakh
2021-22 Audit -44AB(e)- 44AD(4)-As business income is less than 8% , Turnover is
approx 67 lakh
2022-23 Turnover is approx 51 lakh and profit is more than 8%

kindly solve above query shall i carry tax audit even though profit is more than 8% and turnover is less than 1 cr. for the Fy 22-23 under which section shall audit applicable

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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17 July 2023 Yes. Tax audit u/s. 44AB(e) is applicable in this case.

CA Nidhi Kanabar

CA Nidhi Kanabar (Querist)
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17 July 2023 entity is partnership firm and closed the business in current year i.e Fy 23-24 in that case what will do shold do tax audit as per 44ad if once you opt out from 44ad you need to carry Tax audit for 5 years right in between 5 year firm closed the business only rental income which is not core activity

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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17 July 2023 You need to file financial details in ITR till the closing date of the firm. If the TO is 51 lakhs in the said period with more than 8% profit, tax liability under said section does arise. No excuse even if it is last but one year.

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