Query about Tax audit

This query is : Open

Neha (Querist)
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28 March 2021 Sir/Madam
I am a professional having a proprietorship business for Financial year 2019-20 my professional income is Rs 738600. Profit from business profession is Rs 312000 ( which is less than 50% of professional income). Also have annual rent income 210000. Do I need a Tax Audit. Please mention income tax section applicable if possible.
Please guide
Thanks in advance

CA Amit Kumar

CA Amit Kumar (Expert)
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28 March 2021 Yes, Tax audit will be applicable as your income is less than 50% of the Gross Revenue. Section 44ADA clearly mentions that a Resident in India who is engaged in profession as mentioned in section 44AA(1) and whose total gross receipts does not exceed Rs. 50 Lakhs shall offer higher of the following as presumptive income:
a) 50% of the total receipts from the profession
b) Income offered by the assessee from the profession.

So either you offer your PGBP income upto 50% of gross revenue Or you can go for Tax audit.

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CA PARTH SHAH

CA PARTH SHAH (Expert)
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29 March 2021 First of all, you need to check whether the your profession falls under specified professions under section 44AA or not.
Section 44ADA only applies to the specified professions mentioned under 44ADA.

If your profession qualifies under section 44ADA, then you will have to show atleast 50% profits of the gross revenue.

If the profession does not fall under Section 44AA, then section 44AD shall apply in your case and you shall have to declared atleast 6% profits on your receipts in case of receipts received by banking channels & 8 % profits on your receipts in case of receipts received in Cash.

So in your case, check which section will be applicable to you. If 44ADA is applied, then you will have to show atleast 50% profits on your gross receipts or else you will have to get your books of account audited u/s section 44AB.

If your profession is not in the specified list of profession u/s 44AA, then section 44AD shall be applicable to you. But since your profits are above 6%/8% of the gross receipts, it is advisable to file ITR -3 if you have maintained books of accounts. If books of Accounts are not mentioned then File ITR 4. (ITR for presumptive Income. )

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CA PARTH SHAH

CA PARTH SHAH (Expert)
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