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Individual below Rs. 60 lakh limit

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U S Sharma (glidor@gmail.com) (21056 Points)
Replied 11 July 2011

Originally posted by : deepa

can we all come to a proper and confident answer??

1) for 44AD > net taxable income should 8% or more ( presumptive income)

2) if less then 8% then 44AD does not apply but 44AB applies, where audit is compulsary

3) once 44AB applies, 44AD is automatically withdrawn.



sathianarayanan.t (chartered accountant) (267 Points)
Replied 11 July 2011

IF you read the following para carefully, there  will not be any doubt.

(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) 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.

Then the options are as under:

a. If your turnover is below Rs. 60 lakhs, income from that business is more than 8% of the turnover  no need for audit u/s 44AB.

b. If your turnover is below Rs. 60 lakhs, income from that business is less than 8% of the turnover and your total income is less than the exemption limit, no need for audit u/s 44AB.

c.If your turnover is below Rs. 60 lakhs, income from that business is less than 8% of the turnover and your total income is more than the exemption limit, your accounts have to be audited u/s 44AB.


deepa (CA) (79 Points)
Replied 11 July 2011

thank you all..!!! the discussion really helped me a lot.

Samir (ACA) (113 Points)
Replied 11 July 2011

If this Section is applicable to all business except Professions and that covered under section 44AE.

(1) Does it means that it is better that business such as Tuitions, Beauty Parlours, Hobby Classes, Retail Stores, Milk Centers, & other business which has turnover less than 60 lacs should take benefit of this section and declare 8% income of the turn over and remain free from maintaining a/c's books, etc.?

(2) What if an assesse has any of the aforesaid business but his profit is more than 8% of his Turn over, still should he take advantage of this section? (can the AO take objection, that you have no expenses and your margin is more than 8% of the turnover)

(3) What if we take advantage of this section this year, do we have to continue this in the next F.Y also?

Note.: How we will come to know if his NP is more or less than 8% of turn over, only after we maintain Accounts Books and if accounts books are maintained then Why take advantage of this Section?

 


thakker jitendra (proprietor) (36 Points)
Replied 11 July 2011

it is compulsory to show profit @ 8% or get your accounts audited however ur turnover is less than 60lakhs. there is one possibility if u show your profit below taxable income then after u need not to get ur account audited........




Samir (ACA) (113 Points)
Replied 11 July 2011

Sorry, But I am not getting my answer


ASHVIN (CA Final Student) (52 Points)
Replied 11 July 2011

yes, if u want to shaow profit less then 8 % then audit is compulsory.

but if he show 8% profit then it is benefit  to assessee out of scrutiny assessment.


Nabeel (CA) (3288 Points)
Replied 12 July 2011

Originally posted by : Ravikant

If the individual does not opt for Section 44AD , he is not liable to Tax audit if receipts are below 60 lakh,

and It is NOT compulsory for him to show profit @ 8%

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 12 July 2011

Originally posted by : Samir


If this Section is applicable to all business except Professions and that covered under section 44AE.

(1) Does it means that it is better that business such as Tuitions, Beauty Parlours, Hobby Classes, Retail Stores, Milk Centers, & other business which has turnover less than 60 lacs should take benefit of this section and declare 8% income of the turn over and remain free from maintaining a/c's books, etc.?

- for every business there is some other tax related to nature of business, viz service tax, vat, excise etc, which enforce the assessee to maintain set of records for compliance to the related laws.

- The assesee does not get exempted to maintain books of accounts but he is not compelled to make it 100% true as per audit norms, but he can make presumptive declaration based on his funds flow regarding the income. and opening /closing stock/ debtors and credits and other assets and liabilities, he does not compelled to reconcile them in very true manner but in gross.

 

(2) What if an assesse has any of the aforesaid business but his profit is more than 8% of his Turn over, still should he take advantage of this section? (can the AO take objection, that you have no expenses and your margin is more than 8% of the turnover)

- Yes, he is asked to declare 8% or more, but not less than 8%....AO will not issue any query on excess income, unless he has specific information for concealment of excess income.

- Filing return under 44AD does not exempt the assessee to get selected for regular or scurtiny assessment. 


(3) What if we take advantage of this section this year, do we have to continue this in the next F.Y also?
 

- it depends on the nature and turnover of the assesse, 44AD is optional, assessee may use this option to declare presumptive income or declare exact as per his books. but if the net taxable profit decrease to the extent less than 8% he would be shirted to 44AB for audit of books.

 

Note.: How we will come to know if his NP is more or less than 8% of turn over, only after we maintain Accounts Books and if accounts books are maintained then Why take advantage of this Section?

- say a person started business with 5 lacs of capital, and end of year he realize that he has 7 lacs in bank, no debotrs / no creditrs/ stock of 10000 only, so his excess funds is there with net profit only, on this assumption he can "offer" his presumptive profit for taxation. 

 

 


@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 12 July 2011

Originally posted by : rz's

yes he will hav to get his accounts audited incase he has profit less than 8%



CA,CMA,CS Karan Gogia (Employed) (230 Points)
Replied 12 July 2011

44AD is optional ..

n if he opt out the option and shows lower thn 8% , it is mandatory to get the audit done


deepa (CA) (79 Points)
Replied 12 July 2011

how were retailers treated earlier when sec 44AD was applicable only to them?did they hav to get their accounts audited even if they didnt opt for 44AD and their turnover was less than 40 lakhs?


Anshul Shukla (Article assistant) (63 Points)
Replied 14 July 2011

As per Section 44 AD in i tax 1961 if an assessee having turnover less then 60 lakh then  he have to show his profit of 8 % on persumtive basis and if he want to show profit lower then 8 % then he have to maintained proper books of accounts and gets those books of accounts auditd.


amit jain (Rajasthan) (42 Points)
Replied 16 July 2011

It is not necessary to show profit 8% compulsorly by an individual............ an individual to get his accounts audited when his gross recipts or turnover is Rs. 60,00,000 or more............according to section 44AD of Income tax act, 1961




amit jain (Rajasthan) (42 Points)
Replied 16 July 2011

It is not necessary to show profit 8% compulsorly by an individual............ an individual to get his accounts audited when his gross recipts or turnover is Rs. 60,00,000 or more............according to section 44AD of Income tax act, 1961



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