Is income tax audit required for an it enginner ?

Hi,

Tax audit is applicable if Turnover exceeds Rs. 1 Cr. in case of business and Rs. 25 lakhs in case of profession. Further, a person who claims his income to be lower than the amount determined under the various provisions relating to presumptive income is also required to get his books of accounts audited.

In your case, I think tax audit will not be applicable.

But what about following condition According to Section 44AD(1) an eligible person having turnover up to one crore from eligible business may adopt presumptive income scheme by declaring his business income as 8 % of the turnover. per section 44AD(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."

Hi,

Whether he opted for presumptive taxation. Otherwise, no need to check whether profit exceeds 8% or not. If you are opting for presumptive taxation, and you are claiming that your net inome is less than 8% as per Sec. 44AD, then you are required to do tax audit for your business. 

 

He uses ITR-4 form for filing his Freelance Income (Profession) and business income (firm). But ITR-4S should be use for Presumptive taxation. But if he use ITR-4S then he can’t use it for freelancing income as Freelance Professionals. If he wants to take benefit of presumptive taxation with 8% profit (without audit), Does it mean that he need to fill two forms ITR-4 (for showing freelance income) and ITR-4S (for firm with presumptive taxation)? Is there any single form that he can use for both? Please reply. Thanks in advance.

You said

Originally posted by : Ajith T S
	Hi, If you are opting for presumptive taxation, and you are claiming that your net inome is less than 8% as per Sec. 44AD, then you are required to do tax audit for your business.

I found an article on simpletaxindia.net that says "engineering professions (a person carrying on profession as referred to in sub-section (1) of section 44AA) are Excluded /not covered under 44AD"

Here is article link https://www.simpletaxindia.net/2013/08/tax-audit-mandatory-if-turnover-of.H T M L#axzz4EAyUJtJW

Because my friend is a freelancer professional (Software Engineering Profession) so he should be exempted that means he is not supposed to get audited even if he opts for presumptive taxation and shows less than 8% profit.

Is that right?

Can you please confirm it?

Hi,

If the actual income from the business covered under section 44AD is lower than the income prescribed under the presumptive scheme, then the assesses can declare income from aforesaid business at a lower rate (i.e., at less than 8%).

If the asses see does so, i.e., declares lower income and his actual income exceeds the maximum amount which is not chargeable to tax, then the relief from maintenance of books of account is not available and he is required to maintain the books of account as per section 44AA and further, he has to get such books of account audited as per section 44AB.

Originally posted by : Ajith T S
	Hi, If the actual income from the business covered under section 44AD is lower than the income prescribed under the presumptive scheme, then the assesses can declare income from aforesaid business at a lower rate (i.e., at less than 8%).

My friend's

Freelancer Income = 7 Lac

Total business turnover= Rs. 12,000

Net business loss = 240 rs. ( Profit less than 8% of 12k)



Does quoted condition apply ?