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Section 44ad

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This query is : Resolved

JUNAID MUKHTAR DHANSE (Querist)

03 April 2014 Dear Experts,
Kindly solve my problem.
For A.Y 13-14 my firm turnover is 83 lakh and I have calculated profit as per sec 44AD (8% on turnover)i.e 6.64 lakh.If I deduct remuneration & Int. then my profit is 75000/-
so my question is firm is applicable for Tax audit or not ? Because after remuneration profit is below 8%. AND for tax audit Net profit is considered after or before remuneration ?

Thanks
Junaid

MEHUL SHAH

MEHUL SHAH (Expert)

11 April 2014 Audit is not applicable in this case as net profit should be 8 % before interest and remuneration but the remuneration should be as per Section 40(b). Suppose if in the above case there is no interest, the remuneration should be 90 % of 3,00,000/- + 60 % of 3,64,000/-. Hence profit should be Rs, 1,75,000/- and your Tax Payable shall be 30 % of Rs. 1,75,000/-. Interest can be maximum 12 % of Capital and to that extent profits may be reduced and then 40(b) be applied.

Regards
CA Mehul Shah
9723459572
mehul@raseshca.com

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