Compulsory tax audit applicable or no

Others 267 views 5 replies

Shrividhya

CA Final Student

74 Points Posted on 03 January 2019

A trader has a turnover of Rs.25 lacs for the AY 17-18 and he declared 8% profit u/s 44AD in the year to file ITR.

In Current AY 18-19 his turnover is Rs. 65L if he go for 8% his tax liability is high. So whether we can reduce profit % and go for tax audit or whether we can show his profit less than Rs. 2,50,000 (i.e maximum income exem.limit) and give books without tax audit. please guide.

Replies (5)

Sahil Bhatia

Practicing Chartered Accountant

290 Points Posted on 03 January 2019

You can opt for Tax Audit in AY 2018-19, but if you opt it, then this provision will be applicable to you for 5 AY till AY 2022-23. I won't suggest showing profit less than 2.5L

Shrividhya

CA Final Student

74 Points Posted on 03 January 2019

Thank you sir. sir please let me know the reason why you will not opt for profit less than 2.5L

Sahil Bhatia

Practicing Chartered Accountant

290 Points Posted on 03 January 2019

Originally posted by : Shrividhya
	Thank you sir. sir please let me know the reason why you will not opt for profit less than 2.5L

No specific reason...just to let you know that if you show it under 2.5L you should have everything documented otherwise penalty not for under reporting but for non compliance of tax audit will also be applicable.

rama krishnan

12244 Points Posted on 03 January 2019

if you want show less than 8% or 6% or loss or below taxable limit, then your books are required to be audited. for clarification PLS refer FAQ section in income tax website

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44AD(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee to whom the provisions of sub-section (4) are applicable and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.

I my opinion is the profit from the business is reasonable below 2.5L there s no harm in filing the return without audit. Its advisable to prepare balance sheet and PL a/c to explain in case there is a query.