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Applicability of tax audit.

Ankita Jain (CA in practice) (185 Points)

28 July 2021

Suppose Mr. A turnover below 1 crore in section 44AD.
But this year, in books of accounts, there profit is coming less than 6%.
Can they still show profit of more than 6% in ITR & escape from Tax audit?
Profit exceeds Maximum amount of income not chargeable to tax.

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10 Replies

Ankit Neema (2742 Points)
Replied 28 July 2021

In my view, if you are showing minimum 6%/8% profit of turnover then Audit is not required. Even if you have lower profit in Books and you decide to declare minimum 6/8% then no audit required.

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Hari Beldona (ACA) (1533 Points)
Replied 28 July 2021

Tax paid by the assessee under Section 44AD is calculated at 8% of the individual's gross turnover for the financial year, provided that his or her gross turnover is below Rs 1 crore. This limit has been raised to Rs 2 crore as per the Budget 2020.

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 28 July 2021

Yes if profit is showing greater than 6% of turnover then tax audit should be escaped

Hari Beldona (ACA) (1533 Points)
Replied 28 July 2021

8% or more

debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 28 July 2021

The Income-tax Law requires the taxpayer to get the audit of the accounts of his business/profession from the view point of Income-tax Law. A person carrying on business, if his total sales, turnover or gross receipts (as the case may be) in business for the year exceed or exceeds Rs. 1 crore.