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44AB applicablity

02 January 2021

Do a firm conducting business required to audit if it is maintaining books of accounts and disclosing final income less than 6 or 8 percentage of turnover

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15 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 02 January 2021

Yes required

Smit Shah (524 Points)
Replied 02 January 2021

Yes as per 44AD(5)

1 Like

Sumit Shukla (378 Points)
Replied 02 January 2021

What if it is first year of the firm Will Sec 44AB applicable.
Secondly as per Sec 44AB in case of Sec 44AD(4) audit applies. Thus what if the firm is maintaining books of accounts always and showing income lower than 6 or 8 percentage of reciept.

If doubt then please read both the section and let me know.

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 02 January 2021

Sec 44ab applies only if income exceeds basic exemption limit and maintaining books of accounts and showing profit less than 8% of turnover required audit as per 44ad(5)

Sumit Shukla (378 Points)
Replied 02 January 2021

Please See Sec 44AD(5) and assume my first question is for the first year of the firm...

Smit Shah (524 Points)
Replied 03 January 2021

Question of auditing books us 44ad will only arise when you not showing 6 or 8% of your total turnover as your income in any five year succeeding the year in which presumptive income have been showned.

1 Like

Balamurali Unnithan MS (STUDENT) (1631 Points)
Replied 03 January 2021

Firms cannot choose presumptive taxation ,u/s 44AD !
Firms mandatory to maintain books of account !

44AD is applicable only to Individual / HUF

Sumit Shukla (378 Points)
Replied 03 January 2021

Firm can opt 44AD

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 03 January 2021

Audit will be required in this case

Sumit Shukla (378 Points)
Replied 03 January 2021

Sourav in which case is it for last comments of 02 January

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 03 January 2021

Yes for 2nd January

Sumit Shukla (378 Points)
Replied 03 January 2021

Have you read 44AD(5) along with 44AB please read and I am still confuse....And Read Smit Shah comment

Neethi V. Kannanth (.) (19015 Points)
Replied 04 January 2021

As per Section 44AD(4) amended vide Finance Act , 2017 where an eligible assessee who declares profits of any previous year in accordance with Section 44AD(1) i.e. a sum equal to eight per cent or six percent, as the case may be of the total turnover or gross receipts of the assessee in the previous year on account of such business shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession" then he must have to declare profit of next 5 assessment year succeeding such previous year in accordance with section 44AD(1). If he declares his profits and gains lower than the prescirbed limit then he is required to get his accounts audited under section 44AB(e) provided his total income exceeds the maximum amount not chargeable to tax.