SECTION 44AD AND COMPULSORY TAX AUDIT

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manager-Finance
24 Points Posted on 11 May 2022

I AM WORKING AT SOLE PROPRITORSHIP FIRM.

WE HAVE FILED IT RETURN U/S 44 AD, IN FINANCIAL YEAR:2021-22[6% OF TURNOVER]

BUT IN THE FINANCIAL YEAR:2021-22, WE WANT TO DECLARE THE PROFIT LESS THAN 6% OF TURNOVER AND TURNOVER IS MORE THAN 1 CRORES BUT LESS THAN 2 CRORES.

IN THIS CASE IS IT NECESSARY /ESEENTAIL  TO GET BOOKS OF A/CS AUDITED?

I UNDERSTAND THAT THE RECENT AUDIT TURNOVER LIMIT IS 10 CRORES[WITH LESS THAN 5% RECIPT /PAYMENTS ARE THROUGH MODE OTHER THAN DIGITAL MODE.

I REQUEST CLARIFICATION BY EXPERTS IN THIS MATTER.

REGARDS & THANKS.

FROM:MITESH SHAH]

 

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On 11 May 2022 at 11:03 Report
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Quick Summary
This discussion clarifies the rules around Section 44AD of the Income Tax Act, specifically concerning presumptive taxation for sole proprietorships. If your turnover is between £1 million and £2 million and you wish to declare a profit less than the presumptive rate (6% for non-cash transactions), you will be required to get your books of accounts audited for that particular financial year. Failing to do so means you cannot opt for presumptive taxation for the next five assessment years.

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170 Points Posted on 11 May 2022
Yess, you have to get your books of account audited and for the next 5 years you are eligible to opt for Presumptive.
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On 11 May 2022 at 11:23
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Need help
695 Points Posted on 11 May 2022

That 10 crore limit does not apply to presumptive tax.

So if you want to declare less than 6% profit, then a tax audit will be needed.

It might be less expensive / painful to just go with the 6%. Compare your increased tax (on 6% vs what you actually have) with the time and cost of maintaining your accounts, paying for a tax audit, correcting entries where needed and saving records.

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On 11 May 2022 at 12:04
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CFO- at NHTF
58280 Points Posted on 11 May 2022
@ Mitesh Shah,

If all receipts are by online or account Payee modes then you may declare 6% profit u/s 44AD

Audit is not required in this case since your turnover is less than 2 Crores
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On 11 May 2022 at 14:47
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170 Points Posted on 11 May 2022
Mr. Eswar Reddy, kindly read Sec 44AD(5), Audit is mandatory if the Assessee opts out of Presumptive Taxation.
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On 11 May 2022 at 15:55
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CFO- at NHTF
58280 Points Posted on 11 May 2022
Might be oversight, I have not read it properly.

If they want to declare less than 6% profit then Audit is mandatory
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On 11 May 2022 at 21:07
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19 Points Posted on 29 July 2022
Now suppose if in same case turnover is less than 1 cr and we just do not have profit of 6 %
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On 29 July 2022 at 07:44
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170 Points Posted on 29 July 2022
Still the answer remains same, if your GTI > Basic exemption limit and you've shown profit less than 6/8% , you have to get your BoA audited
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On 29 July 2022 at 07:49
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19 Points Posted on 29 July 2022
Audit for how many years?
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On 29 July 2022 at 10:04
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170 Points Posted on 29 July 2022
For thta particular year only, if you breach then you won't be able to opt for Presumptive for next 5 AYs
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On 29 July 2022 at 10:07
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manager-Finance
24 Points Posted on 29 July 2022

THANKS ALL FOR YOUR RESPONSE & GUIEDANCE.

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On 29 July 2022 at 12:05

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