A pvt ltd company

IF A PRIVATE LIMITED COMPANY HAVING TURNOVER RS. 35 LAC IN THE F.Y 14-15 AND COMPANY WANT TO SHOW ITS N.P BELOW 8% OF ITS G.P, SO IS IT NECESSARY TO GET TAX AUDITED.

Replies (1)

As per Section 44AB, that company need not get its accounts audited.

However, as per sec 44AD, it has turnover less than Rs 1 crore and is showing NP less than 8% of turnover or Gross Receipts (and not GP) is liable to get its accounts audited.

There is small twist though. If that company has no other source of income and it has made loss than Tax Audit will not apply. Because as per Sec 44AD(5), if total income of assessee is doesnt exceed maximum amount not chargeable to tax then accounts need to be audited.

In simple language,

T/o < 1 crore, Profit < 8% of T/o or Gross receipts then Tax Audit Applicable

T/o < 1 crore, But made Loss ( which is also < 8% of T/o or Gross receipts) and Total Income is < Rs 0 then Tax Audit does not Applicable

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