Gross turnover??
This query is : Resolved
Guest
Guest
(Querist)
15 August 2012
in case of section 44AD(AND NOT 44AB),IN CASE of derivative trasaction we must either have profit of 8% of turnover or get ur bokks audited.
NOW KINDLY CLARIFY FOR sec 44ad, DERIVATIVE WAT WILL BE CONSIDERED AS TURNOVER(for the puprpose of 44ab sum of favourable and unfavourable is considered as TURNOVER)but wat about section 44ad????
KINDLY ALSO TELL FINE FOR NON AUDIT
NOW KINDLY CLARIFY FOR sec 44ad, DERIVATIVE WAT WILL BE CONSIDERED AS TURNOVER(for the puprpose of 44ab sum of favourable and unfavourable is considered as TURNOVER)but wat about section 44ad????
KINDLY ALSO TELL FINE FOR NON AUDIT
16 August 2012
In the absence of an exclusive definition of 'turnover', the accepted definition for the purpose of section 44AB can be followed for section 44AD as well, meaning thereby the 'absolute value' of profit and loss is the turnover.
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Guest
Guest
(Querist)
16 August 2012
kindly some other expert plz confirm the same actually due to this ambiguity i have lost my nights sleep as i fear i have not done audit and have to pay a fine of rs 100,000 as i am still a student!
26 July 2024
Under Section 44AD and Section 44AB of the Income Tax Act, 1961, the treatment of turnover for derivative transactions can be different. Here’s a detailed clarification:
### **Section 44AD Overview**
**Section 44AD** is a presumptive taxation scheme for small businesses. It allows eligible businesses to declare 8% (or 6% for digital transactions) of their turnover as income, and the tax is computed based on this deemed income. Businesses with a turnover up to ₹2 crore can opt for this scheme.
**Eligibility Criteria**:
- The business should not be engaged in professions referred to in section 44AA(1) (e.g., accountancy, technical consultancy, etc.).
- The turnover should not exceed ₹2 crore in a financial year.
- The taxpayer should not have any income from other sources, such as capital gains, interest, etc.
### **Section 44AB Overview**
**Section 44AB** deals with the mandatory audit of accounts for businesses with a turnover exceeding ₹1 crore (or ₹10 crore if certain conditions are met). Under this section, if you do not opt for Section 44AD or fail to declare a profit of 8% of the turnover, the books of accounts must be audited.
### **Turnover for Derivative Transactions**
**For Section 44AD**:
- **Turnover Definition**: For the purpose of Section 44AD, turnover is generally understood as the total of all receipts, including any amount received in respect of derivative transactions.
- **Derivative Transactions**: In the case of derivative transactions, the turnover is considered as the total of all favorable and unfavorable transactions, similar to the definition used under Section 44AB. This means that both the positive and negative sides of derivative trades should be included in the turnover calculation.
### **For Non-Audit under Section 44AD**:
- **Turnover for Derivative Transactions**: For the purposes of Section 44AD, if you are engaged in derivative trading, the turnover includes both profits and losses from these transactions, summing them up as per the guidance provided for Section 44AB.
### **Penalty for Non-Audit**:
If a taxpayer is required to get their accounts audited under Section 44AB and fails to do so, the following consequences can arise:
1. **Penalty under Section 271B**: A penalty of ₹1,50,000 or 0.5% of the turnover (whichever is less) may be imposed for failure to get the accounts audited as required.
2. **Additional Penalties**: Non-compliance can also result in other penalties and complications such as disallowance of expenses or denial of deductions if the correct income is not reported.
### **Summary**
- **Turnover Calculation for Section 44AD**: For derivative transactions, the turnover includes both favorable and unfavorable transactions.
- **Non-Audit Penalty**: For non-compliance with audit requirements under Section 44AB, a penalty of ₹1,50,000 or 0.5% of the turnover, whichever is less, may be imposed.
It's advisable to maintain accurate records and ensure compliance with all relevant provisions. If in doubt, consulting a tax professional or chartered accountant would be prudent to ensure adherence to tax regulations and accurate filing.
### **Section 44AD Overview**
**Section 44AD** is a presumptive taxation scheme for small businesses. It allows eligible businesses to declare 8% (or 6% for digital transactions) of their turnover as income, and the tax is computed based on this deemed income. Businesses with a turnover up to ₹2 crore can opt for this scheme.
**Eligibility Criteria**:
- The business should not be engaged in professions referred to in section 44AA(1) (e.g., accountancy, technical consultancy, etc.).
- The turnover should not exceed ₹2 crore in a financial year.
- The taxpayer should not have any income from other sources, such as capital gains, interest, etc.
### **Section 44AB Overview**
**Section 44AB** deals with the mandatory audit of accounts for businesses with a turnover exceeding ₹1 crore (or ₹10 crore if certain conditions are met). Under this section, if you do not opt for Section 44AD or fail to declare a profit of 8% of the turnover, the books of accounts must be audited.
### **Turnover for Derivative Transactions**
**For Section 44AD**:
- **Turnover Definition**: For the purpose of Section 44AD, turnover is generally understood as the total of all receipts, including any amount received in respect of derivative transactions.
- **Derivative Transactions**: In the case of derivative transactions, the turnover is considered as the total of all favorable and unfavorable transactions, similar to the definition used under Section 44AB. This means that both the positive and negative sides of derivative trades should be included in the turnover calculation.
### **For Non-Audit under Section 44AD**:
- **Turnover for Derivative Transactions**: For the purposes of Section 44AD, if you are engaged in derivative trading, the turnover includes both profits and losses from these transactions, summing them up as per the guidance provided for Section 44AB.
### **Penalty for Non-Audit**:
If a taxpayer is required to get their accounts audited under Section 44AB and fails to do so, the following consequences can arise:
1. **Penalty under Section 271B**: A penalty of ₹1,50,000 or 0.5% of the turnover (whichever is less) may be imposed for failure to get the accounts audited as required.
2. **Additional Penalties**: Non-compliance can also result in other penalties and complications such as disallowance of expenses or denial of deductions if the correct income is not reported.
### **Summary**
- **Turnover Calculation for Section 44AD**: For derivative transactions, the turnover includes both favorable and unfavorable transactions.
- **Non-Audit Penalty**: For non-compliance with audit requirements under Section 44AB, a penalty of ₹1,50,000 or 0.5% of the turnover, whichever is less, may be imposed.
It's advisable to maintain accurate records and ensure compliance with all relevant provisions. If in doubt, consulting a tax professional or chartered accountant would be prudent to ensure adherence to tax regulations and accurate filing.
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