Tax audit limit u/s 44ab extended

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Tejas Sant (Querist)
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01 March 2016 Dear Colleagues, Now that we understand from the Budget that Limit u/s 44AD for presumptive taxation has been increased to 2Cr. Is it deemed that the limit u/s 44AB has also been increased because - Every person (Individual, HUF, Firm) with Income below 2Cr will go for Presumptive Taxation and declare profit above 8% to avoid Tax Audit. As per finance act, sec 44AB has been amended only to the extent of Increasing Limit for profession to 50Lakhs. Thus this means that 44AB sub clause (a) for business has been specifically excluded. Your thoughts.

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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01 March 2016 Tejas, you have made a very valid point. The Finance Bill 2016 placed before the Parliament on 29th February 2016, has increased the tax audit limit for professionals to Rs.50 lakhs to bring it in tune with section 44ADA, but while increasing the limit for 44AD has not amended the related clause in section 44AB.

This error will in course of the debate on Finance Bill be looked into and the amendment will be effected. I think for A.Y.2017 -18 the tax audit exemption limit u/s 44AB would also be raised to Rs.2 Crore.

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Amol S Joglekar

Amol S Joglekar (Expert)
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02 March 2016 We need to wait till the budget gets assented. Prima facie it looks like ERROR.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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02 March 2016 It is not deemed that the limit of 44AB is increased. It can't be increased also because if increased to 2 crore, that will contradict the substituted section 44 AD (4).

It is not at all an error.

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Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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02 March 2016 Thank you Mr. Warrier. Then it will result in unnecessary litigation on grounds of discrimination by way WPs. The necessary amendments have to be provided for all relevant section. As a senior practitioner, I am sure you have come across many instances where one section is inserted or amended, but the corresponding references in some other section is either overlooked or ignored. If it is not an error, then, it opens the gateway for unnecessary litigation further burdening the already overburdened judiciary. and if it is an error, it ought to be rectified.

Tejas Sant

Tejas Sant (Querist)
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03 March 2016 Thank you everyone for your guidance/opinion. As per my observation of the issue, for all practical purposes, each assessee will go Presumptive taxation who's sale are in between 1-2Cr will go for presumptive taxation just to avoid Tax Audit. Even if we assume that 44AB limit is 1Cr, then how can we do Audit u/s 44AB for assessee's going for Presumptive Taxation since no books of accounts will be maintained by them. Correct me if I am wrong.

Tejas Sant

Tejas Sant (Querist)
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03 March 2016 Thank you all for your Opinions/Guidance. As per my observation for the issue, for all practical purposes, Assessee who's income is in between 1-2Cr, will opt for presumptive taxation and escape the net of Tax Audit. Even if we assume, that 44AB limit is not increased then how will it possible for professionals to do Tax Audit of Assessee's who have not maintained books since they are going for Presumptive Taxation. Correct me if I'm wrong. Thanks

Amol S Joglekar

Amol S Joglekar (Expert)
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03 March 2016 It could be the range between 1 - 2 cr wherein the assessee will have a choice whether to opt for presumptive taxation or go by tax audit. We need to wait till the budget is assented.

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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03 March 2016 Agreed with Mr.Amol S Joglekar. Thank you for your valuable inputs.

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