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Tax audit for turn over of 22 lakhs

This query is : Resolved 

My propritor ship GST firm has turnover of 22 lakhs during FY 2020 - 2021.and net profit is 1%• is Tax audit applicable in this case? Please reply?

44AD/44ADA: Not required because taxable income does not exceed basic exemption limit.
Normal (no 44AD/44ADA): Not required as the turnover threshold limit has not crossed.

But net profit is 1%

Yes, I read that.
As I understand, no tax audit is applicable

No Tax Audit is not applicable because your turnover from the eligible business in less than the limit required u/s 44AB.

Which ITR I NEED TO FILE ? Please clarify?

For clarity of audit applicability, please clarify your nature of business...

Supply of fabrics and steel materials

Whether presumptive assessment u/s. 44AD was opted in any of preceding years?

No but my gp is 1.25% and no presumptive assessment u/s 44AD was opted in any year

In that case Tax audit not applicable. You can file ITR 3 under normal assessment. (with books of accounts maintained). (NP below 6/8% will not be applicable here)

My np is Point. 5% only.

Let me tell, your total income from business comes to around 11 Thousand only. which is below exemption limit.
Though that criteria, may or may not apply here , but rest assured, there is no tax audit liability.

So no need of Tax audit here at all. Which ITR I need to file? Please clarify?

My CA is Insisting for audit. My CA Point is net profit is below 8% so Tax audit becomes mandatory as per Income Tax law. If no audit is done there will be Penalty as per my CA view. Please advise How to convince my CA?

If opted for 44AD, only then min 8% (or 6% as applicable) of turnover to be declared as profit.
In your case, since 44AD is not opted for, no audit would be required up to a turnover of Rs.10 cr for FY20-21 if cash transactions are limited to 5% (however, if cash transactions are >5%, Rs.1cr would be the turnover limit for no-audit), even if the profit is 5% in this case.

What is your total taxable income?

My net Income from Business is 6000 and interest Income from loan is 200000 so total Income is around 206000.proprietor of Business is Huf firm.

My Income is below Taxable Income and this is Huf. Please advise

As per sec. 44AD(5) of IT .....
(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee to whom the provisions of sub-section (4) are applicable and ....... whose total income exceeds the maximum amount which is not chargeable to income-tax,........ shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB."

As the total income is below 2.50 lakhs.. which is the maximum amount not chargeable to income tax...... tax audit not applicable....

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