A partnership firm (NOT LLP) incorporated on 01.04.2018. The total sales for FY 2018-19 is Rs.10,00,000/- and the profit is Rs.2,000/-. Please provide the solution for following queries:-
1. Whether the firm is liable for tax audit due to section 44AD (4) &(5) alongwith reasons for the same?
2. What would be the tax liability of the firm?
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Limit for mandatory Tax Audit
Replies (13)
Yes the firm is liable to get its account audited i.e. tax audit for the FY 2018-19, The penalty for non-completion of the tax audit report is 0.5% of the turnover or the gross receipts, this penalty amount is subject to a maximum of ₹ 1,50,000.
Sir thank you for your instant reply. I want to further add something to this:-
A partnership firm is required to get its accounts audited under Section 44AD(5) when the firm falls under Section 44AD(4) and total income exceeds maximum amount not chargeable to tax, but in our case the firm is not falling under Section 44AD(4) because our firm is newly created and has not even once availed Section 44AD therefore according to me the firm is not covered under section 44AD(5) and hence not required to get its accounts audited.
Yes section 44AD(4) is not applicable to your Firm but section 44AB(d) applicable
Sir our firm is in business not profession and also 44AD(4) & 44AB(d or e) are not applicable so why to get tax audit?
Can you please tell me how section 44AB(d) is not applicable on you??
Sir section 44AB(d) says that in case of a person carrying on the profession shall, if the profits and gains from the profession are deemed to be the profits and gains of such person under section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or
So this is not applicable because we are not in professional services and are engaged in business of trading in goods
Https://www.incometaxindia.gov.in/Acts/Income-tax%20Act,%201961/2016/102120000000058099.htm open on desktop
Sir link is not opening please provide screenshots
Kindly read provided part in section 44AB
Sir this is not the updated act. Click on the link below to access the updated bare act:-
As per your link kindly read provided after point e
Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year:
means this section means 44AB in your case apply if you declare the profit lower than 8% or 6%..
Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year:
means this section means 44AB in your case apply if you declare the profit lower than 8% or 6%..
Sir can you please provide your phone number as some confusion is still there
Kindly check message
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