TAX AUDIT QUESTION
This query is : Resolved
Sayantan Chakraborty
(Querist)
20 July 2026
SCENARIO 1 : If a partnership firm turnover 70 lakh and profit before partner remuneration is 5 lakh also 5 lakh paid to partner as remuneration tax audit applicable?
SCENARION 2 : If a partnership firm turnover 70 lakh and profit before partner remuneration is 5 lakh also 4 lakh paid to partner as remuneration tax audit applicable?
INFORMATION : FIRM IS NOT OPTING (44AD) AND MAINATAIN REGULAR BOOKS OF ACCOUNTS
SCENARION 2 : If a partnership firm turnover 70 lakh and profit before partner remuneration is 5 lakh also 4 lakh paid to partner as remuneration tax audit applicable?
INFORMATION : FIRM IS NOT OPTING (44AD) AND MAINATAIN REGULAR BOOKS OF ACCOUNTS
21 July 2026
Assuming the firm has strictly maintained regular books historically and has not recently broken a Section 44AD filing chain, Tax Audit is not applicable in either Scenario 1 or Scenario 2. Because the turnover (₹70 Lakhs) is under ₹1 Crore, the firm can simply maintain books and file ITR-5 without an audit. However, they must restrict the partner remuneration deduction to ₹3,90,000 under Section 40(b), leaving the firm with a taxable income of ₹1,10,000 in both scenarios.
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