Section 44AD

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This query is : Resolved

Manoj (Querist)

07 July 2011 As Per sub section 5 of Section 44AD only persons having total income exceeding the maximum amount which is not chargeable to income-tax and claiming income below 8% of turnover or gross receits shall have to maintain book under section 44AA and get get books audited under section 44AB, however it doest not specify anything about persons claiming income below 8% of turnover and having income which is less than the maximum amount that is not chargeable to tax.What shall be the provisions applicable to such persons?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

07 July 2011 The provisions of maintaining books of account may be referred U/s 44AA(2) which can be made applicable for those assessees who are not covered U/s 44AD or 44AE.

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Logically, it can be interpreted that such a person is not required to get his accounts audited if his total income remains below the taxable limits, in spite of taking his presumptive profits @ 8% of turnover.
It will not make any difference for the revenue even if he shows profits at lower rate.
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Total Income can be decided only after
arriving the business income. If an assessee shows profits at a lower rate,
and due to that if his Total Income falls below the taxable limit, according to the ss(5) he is not required to get his accounts audited. This is the point which has not been clarified in the section.

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