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v ramachandran (retired)     03 August 2021

WHETHER TAX AUDIT IS REQUIRED INRESPECT OF MY SHARE TRADING FOR FY 2020-2021 GIVEN THE DATA BELOW

Dear Chartered Accountant professionals,

I am not making any allegation against anybody, but I need to state that "there is considerable confusion among practising chartered accountants" on TAX AUDIT OF SHARE TRADING  ACCOUNTS causing anxiety and misery to people who consult them. Over the last few years I have sufferred much on account of wrong "expert opinion" by subjecting myself to audit when it was not necessary and not getting audited when it was needed.

I AM IN SHORT SO FRUSTRATED THAT I WANTAN EXPERT  WHO REALLY KNOWS TO THE FOLLOWING CAREFULLY AND PL FOR HEAVENS SAKE GIVE ME THE RIGHT ADVICE(MEANING AN OPINION ACCEPTED BY THE INCOME TAX DEPARTMENT) 

DATE FOR WHICH OPINION O WHETHER TAX AUDIT OF SHARE TRADING ACCOUNTS ARE REQUIRED FOR FY 2020-2021( AY 2021-2022) :

TOTAL TURNOVER IN SHARE TRADING WITH TURNOVER CALCULATED AS PER NORMS: 94 LAKHS.

 NET BUSINESS INCOME(ITR-3) FROM SHARE TRADING AFTER DEDUCTION OF ELIGIBLE EXPENSES: Rs 132000/-.( pl note at this point that share trading turnover is less than 1 crore and income from business does not match upto 6%)

My total income for FY 2021 which includes the above busines sincome, pension, and interest on deposits from bank after deduction of eligible investments etc under sec 80C to 80 U is Rs 391000/-. This taxable income results in a tax of about Rs 4520/- WHICH BECOMES NIL AFTER APPLICATION OF REBATE UNDER SEC 87 A.

Now the second issue to be noted is that I am not paying tax but taxable income before application of 87 A is above the maximum chargeable to tax. My exemption limit as a  senior citizen is Rs 3 lakhs.

3 certified CA's say I do not have to auidt my accounts.

2 certified CAs say I have to because although the turnover is less than 1 crore , my total income breaches the taxable limit. THEY REFER TO SEC 44 AB AND 44 AD.

Honestly as a layman I now have a poor estimation of some CA;s................. cant help it.

CAN ANYONE PLEASE CLARIFY THE ACTUAL RULE- AND JUSTIFY IT WITH REFERENCES TO THE INCOME TAX ACT. ....................................PL HELP. 



 4 Replies

Bharatesh Aski

Bharatesh Aski   03 August 2021

Even I have the same question. please answer anyone correctly in detail 🙏
Manish

Manish (CA)     04 August 2021

Hello sir,


The tax audit turnover limit is one crore. And where most transactions (95+%) were through banks, the limit is ten crores from FY 20-21.
Since your turnover is under the limit, the tax audit is not applicable.
About 44AD; that is a different optional scheme. You can ignore it if not been opted in earlier ITRs.

And your total income is above the exemption limit. Therefore you need to file ITR.

 

Thanks

v ramachandran

v ramachandran (retired)     09 August 2021

DEAR MANISH,

I HAVE CARRY FORWARDBUSINESS LOSS IN SHARE TRADING ALLOWED BY THE I T DEPARTMENT. SO ANYWAY IWILL FILE ITR -3 TO ADJUST THE SAME.

YOU SEEM TO BE CLEAR AUDIT IS NOT REQUIRED WHEN : TOTAL INCOME EXCEEDS THRESHOLD BUT NOT CHARGEABLE TO TAX AFTER APPLICATION OF SECTION 87 .A.

PL RECONFIRM SO THAT I CAN SHOW THESE CONVERSATIONS TO MY AUDITOR WHO THINKS OTHERWISE.

V RAMACHANDRAN

9th august 2021. 

Manish

Manish (CA)     10 August 2021

Yes, as per your details. An audit is not required.

 


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