Tax audit section 44ad

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Entreprenuer
133 Points Joined June 2009

Respected Members,

I have a few doubts on tax audit for partnership firms, especially with regard to Section 44AD. Suppose the Partnership Firm has a turnover of Rs.1,00,000 in a financial year and the net profit after remuneration and other expenses comes to Rs.7,000 which is less than 8% of the turnover. Is tax audit mandatory in this situation?

Does this also apply to loss?

What are the other provisions of this section. Please clarify.

Thanks in advance.

Regards

Chandana

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On 17 June 2015 at 14:03 Report
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CMA
13117 Points Joined May 2009

As I understand, tax audit is required. Provisions say that if lower income than demeed profits & gains are declared, then

  • The taxpayer has to maintain books of account as per 44AA (irrespective of the turnover) if his total income exceeds the exemption limit
  • The taxpayer has to get his books audited u/s 44AB (irrespective of turnover) if his total income exceeds the exemption limit

Since it is a partnership firm, there is no exemption limit.

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On 17 June 2015 at 14:27
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Accountant.
834 Points Joined May 2008

Dear all

I think Tax Audit is required becouse profit shown less than 8% as pe rules

Thanks

Ramanuj

 

 

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On 17 June 2015 at 16:17
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proprietor
24 Points Joined October 2010
Under 44AD there two conditions 1profit less than 8% 2 total income more than basic exemption limit If both these conditions are fulfilled than only tax audit is applicable
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On 17 June 2015 at 16:26
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employed
46 Points Joined October 2012
But for partnership firms net profit before remuneration etc. Is to be seen.
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On 17 June 2015 at 16:57
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Chartered accountant
26 Points Joined June 2008
In case of partnership firm the profit of 8% to be considered is profit before remuneration and interest.
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On 17 June 2015 at 17:03
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Chartered Accountant
28 Points Joined May 2014
Read sec 44AD(2) properly. Sec 44AD(1) requires the profit to be 8%. Sec 44AD(2) says remuneration and interest to partners is deductible from profit declared under sec 44AD(1). So the criteria of 8% is before deduction u/s 40(b).
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On 17 June 2015 at 17:29
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Student CA Final
23 Points Joined March 2015
Books of accounts u/s 44AA and tax audit u/s 44AB is compulsory
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On 17 June 2015 at 19:48
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manager
67 Points Joined October 2013

I am agree with RESPECTED vikram.singh rathod`s opinion 

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On 17 June 2015 at 21:10
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CA
25 Points Joined May 2015
I also agree with respected rathod
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On 17 June 2015 at 21:42
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tax consultant
43 Points Joined August 2009

Net profit @ 8% will be calculated before allowing interest on capital and remuneration to partners. if net profit before intt. on capital and remuneration is more than 8% than no need to audit u/s. 44AB.

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On 18 June 2015 at 08:14
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CMA
13117 Points Joined May 2009
I did not carefully consider remuneration n other expenses to include partner's remuneration n interest. Thanks for correcting.
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On 18 June 2015 at 08:37
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Partner
22 Points Joined November 2013
tb tqq24w2 '$$$�;! ^�274vtell
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On 18 June 2015 at 09:22


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