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Regarding Audit


RUDRA (Income & Corporate Tax Lawyer)     11 August 2020

RUDRA
Income & Corporate Tax Lawyer 
 11 likes  323 points

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There is a money transfer firm which is not registered in GST.
The turnover of the firm is near about 4 crore from bank.
There is refund of 280000 from section 194 N.
So my question is can we generally file the ITR as we file or we have to do audit.

CA KARAN SINGH (CA in Practice)     12 August 2020

CA KARAN SINGH
CA in Practice 
 24 likes  612 points

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Turnover exceeding 1 crore. Audit is compulsory

avater

RUDRA (Income & Corporate Tax Lawyer)     12 August 2020

RUDRA
Income & Corporate Tax Lawyer 
 11 likes  323 points

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But it's profit margin is only 0.15 %. Even he can't pay the fees of audit. Generally he gets commission under section 194H. That's why he was filing ITR. Except this there is no purpose to file ITR. Even his total income is less than basic income.
In this case there is any matter of Forex. I had also discussed this matter with a CA. He is saying that this is the matter of Forex.
so is it?

CA KARAN SINGH (CA in Practice)     12 August 2020

CA KARAN SINGH
CA in Practice 
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Ok, We will go one by one.

1. Applicability of Tax Audit does not depend upon profit margin of the business. If the assessee is required to get his Books of accounts audited under the Income Tax Act, then it is irrelevant to determine whether he has a sufficient profit margin or not.

2. If his commission income is more than one crore, then he compulsorily required to get his books of accounts audited.

3. There is a provision under which assessee can declare his income on a presumptive basis but only when his turnover is limited up to 2 crores and also he is not required to get his books of accounts audited. BUT THE IMPORTANT POINT IS, ASSESSEE EARNING INCOME IN THE NATURE OF COMMISSION CAN NOT DECLARE INCOME ON PRESUMPTIVE BASIS. SO THIS SECTION IS IRRELEVANT FOR YOU.

4. With the Finance Act 2020, Audit of Tax audit limit is relaxed from 1 crore to 5 crores if the assessee fulfills the following two conditions (a) Cash Receipts (includes all types of received in business) does not exceed 5% of Gross Receipt. (b) Cash Payment ((includes all types of payments in business) does not exceed 5% of Gross Payment. REMEMBER PROVISION STATED IN POINT NO. 4 IS  APPLICABLE FROM F.Y. 2020-21.

 


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