Net income of a Firm is Less than 5% of Turnover after ...

Tax audit is applicable only if the gross receipts exceeds 40 lakhs. in ur case the limit has not been reached so the question of audit does not arise . and secondly u can opt for presumptive income and for that the presumptive income i.e 5%  of the gross receipts has to be calculated and from tat figure interest , salary has to be deducted. so what u have done is correct. 

For retailer firms, if NP rate before Interest on Capital & Remuneration to partners is 5% or above and Sales does not exceed 40 lac, u will not come under 44AB, same is in ur case. Hence no tax audit is reqd.

DEAR VIJAY

UNDER SECTION 44AF, 5% OF THE TOTAL TURNOVER (PROVIDED TOTAL TURNOVER DOESNOT EXCEED RS. 40 LAKHS) SHALL BE DEEMED TO THE INCOME AND INCOME TAX WOULD BE LEVIED THEREON. ALL THE DEDUCTIONS UNDER SEC 30 TO 38 WOULD HAVE BEEN DEMMED TO BE ALLOWED WHILE COMPUTING THIS DEEMED INCOME AND NO EXTRA DEDUCTION WOULD BE ALLOWED AGAINST SUCH DEEMED INCOME. HOWEVER, DEDUCTION OUTSIDE THE PERVIEW OF SEC 30 TO 38 COULD BE CLAIMED AGAINST SUCH INCOME.

SALARY AND INTEREST PAID TO PARTNER HAS BEEN COVERED BY SEC 40b OF THE INCOME TAX ACT, THUS DEDUCTION WOULD HAVE BEEN ALLOWED.

THUS, U R NOT ELEGIBLE TO GET THE TAX AUDIT DONE

REGARDS,

MANOJ