08 December 2011
A firm trading in medicine having Gross Turnover45 Lakh and GP is mere 3%. Naturally its Net profit will be below 8%. My Question is that where Such Firm is Liable for Tax Audit u/s 44AB?
(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) 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.
Conclusion:- If it is a partnership firm it is definetly liable.
If it is a properiotory firm, and assessee income exceeds the maximum amount not chargable to tax i.e Rs 1,80,000 it is liable.
Note: There is penalty for concealment of income
Guest
Guest
(Expert)
09 December 2011
Tax Audit is mandatory for all business entities with a Gross Annual Turnover of Rs. 40 lakhs and more.
09 December 2011
Firstly,Tax Audit limit has been revised to 60 lacs.
Secondly, 44AD is applicable when an assessee opts for presumptive basis of taxation, which provides him the liberty to pay taxes on a presumptive rate, without maintaining books of accounts.
An assessee, who does not opt for section 44AD, will be liable for tax audit as per section 44AB, i.e. when turnover is more than 60 lacs.
09 December 2011
In the above question, I want to know the Tax Audit obligation not on Turnover but the profit on turnover. In many types of business Gross profit is mere 3% to 5% and as a result Net profit definetly will be below 8%.In those case Tax audit is Mandatory??
20 February 2012
A firm following deemed income method u/s. 44Ad, but due to interest and remunaration the net income is zero or below Rs. 0-00. “In the case of firms, the normal deductions to the extent allowed under clause (b) of section 40 will be allowed.”Circular : No. 737, dated 23-2-1996.
If income is declared less than 8% of gross receipts but the total income doesnot exceed the exempted limit no audit u/s 44AB r.w. 44AD will be required. SECTION 44AD(5).
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