Profit for the purpose of tax audit u/s44ab for firm

Profit is not a criteria for Tax Audit. Only turnover is the criteria. If the turnover exceeds 1 cr and 44AD is not opted, you have to audit your accounts.

Profit after remuneration

Criteria for Tax Audit U/S 44 AB is turnover and not profit.

totally agreed with the experts

Originally posted by : GST Consultant
	Profit after remuneration

No Sir... This provision is lapsed... 

@ Raja- That is in case of 44 AD.

Yes......

 

 

 

 

 

 

 

 

 

 

 

 

 

U r absolutely correct Mr. Raja

Thank you for the Feedback Sir...!

Sir.... Am I right...?

Originally posted by : Sudiesh
	Profit is not a criteria for Tax Audit. Only turnover is the criteria. If the turnover exceeds 1 cr and 44AD is not opted, you have to audit your accounts.

Please see the sub section 5

The provisions of Section 44AD are as under: 26 [ 27 Special provision for computing profits and gains of business on presumptive basis. 44AD. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”. (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed : Provided that where the eligible assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40. (3) The written down value of any asset of an eligible business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. (4) The provisions of Chapter XVII-C shall not apply to an eligible assessee in so far as they relate to the eligible business. (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. Explanation.—For the purposes of this section,— (a) “eligible assessee” means,— (i) an individual, Hindu undivided family or a partnership firm, who is a resident, but not a limited liability partnership firm as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009) 27a ; and (ii) who has not claimed deduction under any of the sections 10A, 10AA, 10B, 10BA or deduction under any provisions of Chapter VIA under the heading “C. - Deductions in respect of certain incomes” in the relevant assessment year; (b) “eligible business” means,— (i) any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE; and (ii) whose total turnover or gross receipts in the previous year does not exceed an amount of 28 [sixty lakh rupees].] After going through the provisions if the profit is less than 8% of gross income then Tax Audit is required. Now, in case of loss the loss is also less than the 8% and hence to claim the loss TAX Audit is required to be done in case of Partnership Firms. What is less then 0 (Zero) it is -0 and hence there cannot be any excuse that there is loss and no tax audit is applicable but I am of the opinion that for showing net profit less than 8% you have to get the Tax Audit done. In the act no where it is stated that in case of loss no tax audit is required. 
 

Yes. You are correct Mr. Rohit Gupta...

If we can't show the profit as 8% then we ll be get audit our books of accounts from a CA. ITR4's (old) "No accounts Maintained Case" is also shown his profit is 8% and above...

This is safer to Partnership and also Individual.....

Originally posted by : RAJA P M
	Yes. You are correct Mr. Rohit Gupta... If we can't show the profit as 8% then we ll be get audit our books of accounts from a CA. ITR4's (old) "No accounts Maintained Case" is also shown his profit is 8% and above...

Thank you for your Suggession what happen in Case we Show Loss. Then also we required Tax Audit

And as I have askes which profit is to be consider for 8%. Profit before remuneration or Profit after Remuneration.

@ rohit. these provisions of section 44AD has been amended w.e.f AY 2017 - 18.Now there is no provision saying that you have to audit your books if the profit is below 8%. So there is no need to audit books upto the turnover of Rs.1cr. Even if it is loss not required to audit upto 1cr turnover. and if your turnover is above 1 cr and you are not showing 8% you have to audit U/S 44AB(a). But in the case of 44ADA and 44AE if you are declaring profit below prescribed limit(50% and 7500 pm) and the profit exceeds the amount which is not chargeable to tax you have to audit the books.


So in my opinion there is no need to get your accounts audited upto 1cr turnover in the case of eligible business prescribed in 44AD