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Applicability of tax audit.

Ankita Jain (CA in practice) (175 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.

 10 Replies

Ankit Neema (2732 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.
1 Like

Hari Beldona (ACA) (1517 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.

Sourav (Student) (23892 Points)
Replied 28 July 2021

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

Hari Beldona (ACA) (1517 Points)
Replied 28 July 2021

8% or more

debora M (BUSINESS DEVELOPMENT MANAGER)   (1382 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.

Hari Beldona (ACA) (1517 Points)
Replied 28 July 2021

In budget 2020 this 1 crore limit increased to Rs. 2 Crores

Priya Sharma (Account Manager) (120 Points)
Replied 29 July 2021

Yes. Mr.A can show a profit of 6%/8% and can skip tax audit.
1 Like

Hari Beldona (ACA) (1517 Points)
Replied 29 July 2021

Only 8%

Ankit Neema (2732 Points)
Replied 29 July 2021

Why 8%, when in 44AD option given to declare 6% profit on the turnover which is other than cash and 8% in case of turnover is through cash

Nidhi (Chief Accountant) (2060 Points)
Replied 29 July 2021

Yes. Mr.A can show a profit of 6%/8% as the case may be u/s 44AD and escape the tax audit u/s 44AB

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