Tax audit reuired?

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Ankur Gupta (Querist)

27 August 2018 Hi Experts,

I need your suggestion on below.

Assessee: Partnership firm
AY: 2017-18 not opted for presumptive income u/s 44AD
AY 2018-19:-(not wanted to show income u/s 44AD)
Turnover: 15Lacs (less than 1 crore)
Income before Reuneration & Interest on capital = 2.5Lakh (16.67% of turnover)
Income after Remuneration & Interest on Capital = 0.7Lakh (4.67% of turnover)
Do assesse required to audited his accounts for AY 2018-19?

CA.Shubhneet Kaur

CA.Shubhneet Kaur (Expert)

27 August 2018 Tax Audit is required!!!
Remuneration and Interest on capital is an allowable expenditure when not going for the presumptive scheme.
And Since the profit is less than 8% of turnover hence the person is required to get his books of accounts audited

Ankur Gupta

Ankur Gupta (Querist)

27 August 2018 But I guess audit is required if turnover is 1 cr or more as per 44AB

Ankur Gupta

Ankur Gupta (Querist)

27 August 2018 please tell me where it is mentioned in 44AB? to get the accounts audited if less than 8%

According to Section 44AB of the Income Tax Act 1961 (updated upto 2018) the Tax Audit limit for

Business :

Rs. 1 Crore. It means an assessee need to be audited under Sec.44AB if his annual gross turnover/receipts in business exceeds Rs. 1 Crore. This provision is applicable from F.Y. 2016-17 (A.Y. 2017-18) & onwards. It means the limit of Tax Audit u/s 44AB is Rs. 1 Cr. for Business in FY 2017-18 / AY 2018-19.

Profession :

Rs. 50 Lakh. It means an assessee need to be audited under Sec 44AB if his annual gross receipts in profession exceeds Rs. 50 Lakh. This provision is applicable from F.Y. 2016-17 (A.Y. 2017-18) & onwards. It means the limit of Tax Audit u/s 44AB is Rs. 50 Lakh for Profession in FY 2017-18 / AY 2018-19.

What is Presumptive Taxation Scheme (Sec 44AD) ?

Sec 44AD provides special provision for computing profits and gains of business on presumptive basis. You need not to maintain proper accounting. Your net income is estimated to be @8% of your gross receipt/turnover. From F.Y. 2016-17, net income is calculated as @6% of gross receipts are received through digital mode of payments and @8% of gross receipts are received in cash.

Businesses, whose annual gross turnover/receipt does not exceeds Rs. 2 Crore are eligible for this scheme.

CA.Shubhneet Kaur

CA.Shubhneet Kaur (Expert)

28 August 2018 Yes, you read it right that tax audit is required above the said limit or else person has to opt for presumptive scheme.
But if person do not want to opt for presumptive scheme and want to declare the profit below 8% AND fulfils the conditions of 44AD. Tax audit is mandatory.
Refer the link:
https://taxguru.in/income-tax/tax-audit-case-section-44ad-applicable-net-profit-8-6.html

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