Sec 44ae applicability

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This query is : Resolved

Ramkrishna (Querist)

22 October 2013 A transport co. having turnover under tax audit and net profit under 8% is covered under sec 44AB? The company has more than 10 trucks and maiantaing books of accounts.

Nikhil Kaushik

Nikhil Kaushik (Expert)

23 October 2013 once your turnover crosses tax audit limit, you anyways are covered under 44ab irrespective of your net profit percentage.

if the company has more than 10 trucks, 44AE is not applicable. Neither is 44AD (not applicable to company). Compulsory books to be maintained. tax audit applicable. no escape.

Ramkrishna

Ramkrishna (Querist)

31 October 2013 what is to be done if the turnover is under sec 44AB? do audit or simply disclose profit in return?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

23 July 2025 ### Applicability of Section 44AE & Tax Audit (Section 44AB)

#### **1. Applicability of Section 44AE**

* **Section 44AE** applies to **individuals**, **HUFs**, and **firms** (other than LLPs and companies) engaged in the **business of plying, hiring, or leasing goods carriages**, and who **own not more than 10 vehicles** during the year.
* **Key Point**: If the company owns **more than 10 trucks**, then **Section 44AE is not applicable**.

#### **2. Applicability of Section 44AB (Tax Audit)**

* **Section 44AB** mandates a **tax audit** if the **turnover** (or gross receipts) exceeds certain thresholds:

* For **businesses** (other than professionals), the threshold is **Rs. 1 crore**.
* For **professional** income, the threshold is **Rs. 50 lakh**.
* **For transport companies** or businesses involved in goods carriage, the **turnover exceeding Rs. 1 crore** triggers the **requirement for tax audit** under **Section 44AB**, regardless of the net profit percentage.

#### **When is Tax Audit Required**?

* **If your turnover exceeds the prescribed limit (Rs. 1 crore for a business)** and you are not using **Section 44AE** or **44AD** (presumptive taxation schemes), then **Section 44AB** applies and a tax audit is required.
* **Net Profit under 8%**: If your company’s net profit under the normal provisions (without presumptive taxation) is below 8% and turnover exceeds the tax audit limit, a **tax audit** will be required under **Section 44AB**.

#### **3. What to Do When Turnover is Under Section 44AB?**

* **If the turnover exceeds the threshold limit** and **Section 44AB applies**, the company **must get its books audited** by a chartered accountant. The auditor will then prepare the **tax audit report** in Form 3CD and submit it along with the **income tax return (ITR)**.

* **If the company is covered under Section 44AB**, even if the company is maintaining proper books of accounts, the **audit is mandatory**, and the profit must be reported as per the audited results.

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### **In Summary:**

1. **Section 44AE**: Not applicable if the company owns more than 10 vehicles.
2. **Section 44AB (Tax Audit)**:

* Applicable if the turnover exceeds **Rs. 1 crore** for a business.
* The company must undergo a **tax audit** if turnover exceeds the prescribed limit.
3. **Action Required**:

* If **Section 44AB** applies (turnover exceeds Rs. 1 crore), you must **get your books audited** and **file the tax audit report (Form 3CD)** along with the return.

Let me know if you need more details or clarification on any point!

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