4. 1 crore to Rs. 44AB(a) Business Turnover Exceed 1 crore 44AB(b) Professional Gross receipt exceed 50 lacs 44AB(c)‐i Income less than Deemed income u/s 44AE 44AB(c)‐ii Income less than Deemed income u/s 44BB 44AB(c)‐iii Income less than Deemed income u/s 44BBB 44AB(d) for section 44ADA 44AB(e) for section 44AD 44AB(3) Audited under any other law According to third proviso to section 44AB, if a person is required by or under any other law to get his accounts audited, then he need not get his accounts audited again to comply with the requirement of section 44AB. [Under section 44AB] In this article, we will cover every aspect of tax audit as per income tax act. Thank for such a wonderful chart and explanation. 1. In other words, if certain individuals meet the requisites as prescribed under Section 44AB, then these individuals will have to ensure that their accounts are audited by a certified Chartered Accountant. Since in todays world many small salaried or business have some commitment under 80C and other deductions which results into lower Net Taxable Income under Old Regime. Section 44AB gives the provisions relating to the class of taxpayers who are mandatorily required to get their accounts audited from a chartered accountant. 2021-22…Please refer Bare Act and reply please after checking. 25 lacs. Clause (b) If the assessee is carrying on profession and his gross receipts exceed twenty five lakh rupees in the relevant previous year. assessment year 1998-99, provides that in the case of an assessee carrying on a business of the nature specified in sections 44AD, 44AE , tax audit will be required, if he claims his income to be lower than the presumptive income deemed under the said sections. Clause 23 of the Bill seeks to amend section 44AB of the Income-tax Act relating to the audit of accounts of certain persons carrying on business or profession. Your email address will not be published. The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44AB​ is called tax audit. should make suitable amendments in the Income Tax Act, 1961 whrereever it is necessary. 5 crores in cases where the aggregate cash receipts AND aggregate cash payments made during the year does not exceed 5% of total receipt and total payment respectively. GST SATHI 41,833 views. Every person, -- (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees* in any previous year; What is the implication of "any previous year"? FORM NO. (Read Sec 44AD(4) & 44AD(5)). Section 44AB of the Income Tax Act, 1961 includes the provisions for the tax audit. though his total cash receipts and total cash payments does not exceeds 5 % of such receipts or payments, but he is showing his income or profit from eligible business below 8 % or 6 % , as the case may be, he is required to get his books of account audited as per provisions of Sec 44 AD [1]. Its available online on the income tax departments website. Clause 8: Indicate the Relevant Clause of section 44AB under which the audit has been conducted: Verify the applicability of clauses of sec. This section provides for audit of accounts of assessees having total sales, turnover or gross receipts exceeding the specified limits of Rs.40 lakhs for business and Rs.10 lakhs for profession. 92/2020- CT to 94/2020- CT, Extend due dates for Income Tax Audit & Returns for AY 2020-21, Extend Tax Audit/ITR due dates for AY 2020-21, ICAI requests for extension of various Income-tax due dates, Extend Due Dates for Tax Audit and Income Tax Return Filing, Extend Income Tax Audit & ITR Due dates for AY 2020-21, Extend due dates of Audit Reports, ITRs, GST Returns, VSV Scheme, Extend due date for filing ITR & Tax Audit Report- AY 2020-21, Extend Tax/TP Audit & ITR Due dates for AY 2020-21, Open letter for extension of Due dates under Income Tax and GST, Gross receipts from profession in the financial year, Profits and gains (as a % of total Gross receipts), Total sales, turnover or gross receipts in the Financial year, Profits and gains (as a % of total sales, turnover or gross receipts). Section 44AB gives the provisions relating to the class of taxpayers who are mandatorily required to get their accounts audited from a chartered accountant. Plz read the bare act again. My question is regard to stock option trading – if I purchase a stock option on Sharekhan, and make a loss, is it deemed there is a cash payment? Clause 44AB(c)-i 4. However, for a person (b) in the case of a person who carries on business or profession, but not being a person referred to in clause ( a ), be in Form No. Does it mean that if the turnover exceeds Rs. 1 crore in case of the business or Rs. So in first possibility, he satisfy both condition of cash receipts and payments [ does not exceeds 5 % of such receipts and payments ] , he is not require to get his books of account audited under section 44 AB[a]  of the Income Tax Act, 1961. It just discussion and study purpose. 2 crore, provisions of Sec 44 AD [1] is not applicable to him. 1 Crore to Rs. 3CB and the prescribed particulars are to be reported in Form No. person referred to in clause (b) of sub-rule (1) of rule 6G 3CD Statement of particulars required to be furnished under section 44AB of the Income-tax Act, 1961 BACKGROUND The tax audit was introduced by section 11 of the Finance Act, 1984, which inserted a new section 44AB with effect from 1st April, 1985 [Assessment Year 1985-86]. (i) “accountant” shall have the same meaning as in the Explanation below sub-section (2) of section 288; (ii) “specified date”, in relation to the accounts of the assesse of the previous year relevant to an assessment year, means date one month prior to the due date for furnishing the return of income under sub-section (1) of section 139. 30th September of the relevant assessment year. In order to submit a comment to this post, please write this code along with your comment: 748e6fecf2dae2ec32886f3bdf7bc508. —For the purposes of this section, —. [ii] whose total turnover or gross receipts in the previous year does not exceed an amount of two crore rupees. The only option left is to go for audit u/s 44AB(e) which again is a debatable topic. This provision is​ not applicable to the person, who opts for presumptive taxation scheme under section 44AD​ and his total sales or turnover doesn’t exceed Rs. In Second possibility, as he does not satisfy two conditions of maximum 5 % of cash receipts and cash payments, then he has to get his books of audited as per provisions of sec 44 AB [a] of the Income Tax Act, 1961. 9. Under section 44AB of the Income-tax Act, 1961, it is obligatory for certain specified persons, carrying on business or profession to get their accounts audited by an ‘accountant’ and submit a copy of the ‘audit report’ in prescribed form (Form No. b) In case of profession, if gross receipt exceeds Rs. The provisions of Section 44AB have been amended by the Finance Act, 2020 giving rise to major confusion in the minds of businessmen and professionals alike. B] ] If person carrying on business, his total total sales, turnover, gross receipts is Rs. Sir agar mera turnover 1.26 crore hai and Profit ratio 3% hai and all receipts cash then audit under which section. 1) Up to AY 2019-20, a person carrying on business was compulsorily required to get his accounts audited by a chartered accountant, if his total sales, turnover or gross receipts (as the case may be) in business for the year exceeds Rs. The assessee can opt for presumptive taxation u/s 44ADA. assessment year 1998-99, provides that in the case of an assessee carrying on a business of the nature specified in sections 44AD, 44AE , tax audit will be required, if he claims his income to be lower than the presumptive income deemed under the said sections. 94/2020-Central Tax, Removal of Director Under Companies Act, 2013 with Notice & Resolution formats, GST Moving Towards Inspector Raj……. The amended provision of section 44AB is effective for financial year 2020-21 relevant to the assessment year 2021-22. Recently, we have discussed in detail section 44AA (maintenance of accounts by certain persons carrying on profession or business) of IT Act 1961. Section 44AB. I need to figure whether my return needs to be audited or not. Clause 44AB(a) 2. A tax audit is an audit which is necessary by the Income Tax Act, if the annual gross turnover/receipt of the taxpayer exceed the specified limit. 3CA or 3CB) and such further prescribed particulars (in Form No. ‘a] His total profit or income for that business which is eligible business and person is eligible assessee, is more than or equal to 8 % or  6 % [ if his gross total turnover or receipts recd in banking mode] . In this case , assessee has to get his books of account audited as per provisions of sec 44 AD [1]. 3CD. Audit has to be done u/s 44 AD[5] of the Income Tax Act, 1961. If a person files his return under section 44AD and his turnover is up to Rs. 44AB(e) may not applicable unless the assessee had earlier opted for 44AD and then comes out of it. A person is having commission business, 44AD not applicable to it, turnover is 80 Lakhs, and profit is 3 percent, Is audit applicable?? However, w.e.f. (e) carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year. get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed: Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year: Provided further that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BBA, on and from the 1st day of April, 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later : Provided also that in a case where such person is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and furnishes by that date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this section. Join our newsletter to stay updated on Taxation and Corporate Law. Sir, What is meant by cash payments has to be less than 5% or total payments? Is it really so? Maintained by V2Technosys.com, Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), Amendment in Section 44AB & applicability for AY 2020/21- Analysis, How to fill ITR 3 from Tax Audit Report – An Analysis, Income Tax TCS provision – Section 206C[1H] – wef 01/10/2020, Issues in Tax Audit – Difference in ITC in GSTR 2A & GSTR 3B, Conditions for claiming Income Tax deductions under chapter VIA, Bonafide switch from Percentage completion to Project completion method allowable, CIT cannot ask AO to look into issues not within the purview of limited scrutiny, Challenge to vires of Circulars & Constitutional Validity of Section 9(a)(ii) of Direct Tax Vivad se Vishwas Act, Due Dates as per Income Tax Act 1961 expiring on 31st December 2020? In other words for a normal business who has not opted for declaring profit under 44AD (presumitive income) even if it is less than 8% 44AB(e) may not be applicable as 44AD(4) is not applied. It is strange and injustice to small assessee. Section 44AB of the Income Tax Act deals with the audit of accounts of certain individuals. A tax audit is an examination of a taxpayer’s books of accounts. Section 44AB of the Income Tax Act contains provisions pertaining to the tax audit under the Income Tax Audit. The penalty shall be lower of the following amounts: (a) 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such year or years. i.e. Clause (c) of section 44AB, inserted by the Finance Act 1997 w.e.f. (2) The particulars which are required to be furnished under section 44AB shall be in Form No. A third threshold limit of Rs 5 crores has been added in order to reduce compliance burden on small retailers, traders, shopkeepers who comprise the MSME sector. The tax audit is carried on to ensure that the payer has a fully maintained book of records and accounts, that properly depict the taxpayer’s income. Is the new amendment giving an option to assessee (who satisfy the conditions) to refrain from filing tax audit report? A] If person carrying on business, his total total sales, turnover, gross receipts is Rs. However, according to section 271B​, no penalty shall be imposed if reasonable cause for such failure is proved. Maintained by V2Technosys.com, Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), Section 44AB: An Analysis of Tax Audit provisions after Finance Act, 2020, Summary of GSTR 3B Compliance post the 40th GST Council Meeting (Due dates, Interest and Late fees), Bonafide switch from Percentage completion to Project completion method allowable, CIT cannot ask AO to look into issues not within the purview of limited scrutiny, Challenge to vires of Circulars & Constitutional Validity of Section 9(a)(ii) of Direct Tax Vivad se Vishwas Act, Due Dates as per Income Tax Act 1961 expiring on 31st December 2020? 17 [Audit of accounts of certain persons carrying on business or profession.. 18 44AB. Recent Update: For businesses with an annual turnover of less than Rs 5 crore, filing of GSTR-9C for FY 2018-19 has been waived off. Sec 44AD not applicable), Aggregate cash payments ≤ 5% total payments. (b) A person carrying on profession: The total gross receipts exceeds rs. 1 crore in the previous year. The Section 44AB of the Income Tax Act enjoins provisions regarding tax audit under IT Audit. [ that above Rs. Thus, For AY 20-21 the due date for filing tax audit report for FY 2019-20 corresponding to the assessment year 2020-21 will be 30th Sept, 2020 (one month prior to 31st Oct, 2020), (Recent update: On account of the Covid-19 situation , the government in a press conference dated May 13, 2020 announced that the income tax return (ITR) filing deadline for FY 2019-20 for all persons has been extended  from July 31, 2020 & October 31,2020, 2020 to November 30, 2020 and tax audit report due date  from September 30, 2020 to  October 31, 2020 ), Now we will understand all the provisions of Sec 44AB wef. 2nd Para First line is incorrect it should be “With effect from 01/04/2020, that is from assessment year 2021-22” instead of “With effect from 01/04/2020, that is from assessment year 2020-21”. Kindly confirm. 3CA - Audit report under section 44AB of the Income-tax Act, 1961, in a case where the accounts of the …