44AD and salary to partners

Dear Deepak,

Referring to your query, please consider my below-mentioned views:

Section 44AD(1) starts with“Notwithstanding Anything to contrary contained in section 28 to 43C”, which means section 28 to 43C of Income Tax Act, 1961 is not applicable on eligible assessee carrying on an eligible business under section 44AD. Hence, no disallowance 40A(3)can be made.

Please do let us know in case of any concerns.

Sir for Tax audit Limit has been Increased to 5cr by finance act 2020

But correspond Effect has not been given in 44ad 

so suppose assesee turnover is 3cr and his cash payment or reciept is less than 5 percent 

so he avoid taxuaidt and show profit less than 6 %?

@ Abdulqadir,

Referring to your query, please refer the following views: 

Applicability of Tax Audit u/s 44AB 

Business: If total annual turnover, sales, or gross receipts exceeds INR 1 crores.

Applicable from 01.04.2020, where the aggregate of all amount received including the amount received from sale, turnover, and aggregate of all payments made including amount incurred for expenditure, in cash, the following will be the provisions applicable for tax audit:

Now come to your question, In case turnover is INR 3 Cr. and Receipt or payment is less than 5%, then under normal provisions Tax Audit will not be applicable.

And under section 44AD, you cannot avail presumptive benefit as your turnover limit exceeds INR 2Cr.

Further, please note that if you show your income or profit less than 6% or 8% as the case may be in Section 44AD then Tax Audit will be applicable in any case accordingly.