The assessee can opt for presumptive taxation u/s 44ADA. but New Regime is better for net taxable income above 15Lacs. 9. While the turnover limit for Sec 44AB is INR 1 Cr, turnover limit for Sec 44AD is INR 2 Cr. Please go through and let me no , if there is any error or omissions. Appreciable post. I need to figure whether my return needs to be audited or not. Copyright © TaxGuru. The new proviso to section 44AB providing the enhanced turnover limit of Rs. However, for a person 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. In such situation , following situation may arise: 1] Person whose total cash receipts and total cash payments does not exceeds 5 % of such receipts or payments. Is it really so? 44AB(e) may not applicable unless the assessee had earlier opted for 44AD and then comes out of it. 3CA or 3CB) and such further prescribed particulars (in Form No. 1 crore. Clause 8: Indicate the Relevant Clause of section 44AB under which the audit has been conducted: Verify the applicability of clauses of sec. Difficult to Genuine Tax Payers, Discussion on GST Notification No. 30th September of the relevant assessment year. 44AB. If profit is at least 50% of gross receipts of profession, then one can go for sec 44ADA nd avoid tax audit. Does it mean that if the turnover exceeds Rs. a) In case of business, if turnover/gross receipt exceeds Rs. If in this case the aggregate cash receipts and aggregate cash payments do not exceed 5% then the threshold limit will become Rs 5 crores and thus Audit u/s Sec 44AB(a) won’t be applicable. Can such asseesse file tax audit report if they want? Section 44AB of the Income Tax Act deals with the audit of accounts of certain individuals. —For the purposes of this section, —. Penalty for not getting accounts audited under Section 44AB. So from the above discussion, the summary of the provisions are tabulated as below: So from the above discussion and table, the small eligible asseesee who has eligible business, though his turnover is below 2 crore , and his total cash receipts and cash payments is below 5 % of such receipts or payments, is required to get his books of account audited as per sec 44 AD and assessee whose turnover is more than 2 crore , and if his total cash receipts and total cash payments is less than or equal to 5 % of such receipts or payments, is not required to get his books of account audited u/s 44 AB ,So his burden of compliance is reduced but assessee whose turnover is below 2 crore , his burden of compliance is not reduced. Thank for such a wonderful chart and explanation. Section 44AB of the Income Tax Act, 1961 includes the provisions for the tax audit. Thus, where audit is done under other law then 3CA plus 3CD is applicable instead of 3CB plus 3CD. It is strange and injustice to small assessee. should make suitable amendments in the Income Tax Act, 1961 whrereever it is necessary. Tax audit clause 44ab(d) or (e) This query is : Resolved Report Abuse Follow Query Ask a Query. [ that above Rs. It is very say that new amendments in 2020 is not suitable for small taxpayers compared to Middle and Higher class taxpayers. Again his total sales, turnover or gross receipts is above Rs. However, w.e.f. ​​​​​​​The report of the tax audit conducted by the chartered accountant is to be ​furnished in prescribed form i.e. 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 Form No. This is the perfect analysis of the 2 sections. thanks . Clause No. shows profit less than 8% or 6%) then he cannot claim benefit u/s 44AD(1) for that AY and next 5 AYs. All Rights Reserved. 2 crore even then he is not required to conduct audit if he not falls in point (e) below. In order to submit a comment to this post, please write this code along with your comment: ade3c276b2177f4da990677856cad2a3. 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. GST SATHI 41,833 views. In your chart of tax audit — pt no 4 & 5 – if turnover is > than 1 crore & < 2 crore and < 1 crore. Where a person does not declare profit in accordance with Sec 44AD(1) in any AY (i.e. The author shall not be responsible for any extracts or references made. 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. Like you rightly said this 44AB amendment is no useful for turnover less then 2 cr but business having turnover between 2 to 5 can get benefit under this clause. Its available online on the income tax departments website. 1 Crore to Rs. A) For Resident Individual /HUF/Firm (excl LLP) ( i.e. 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. 13 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; or (b) carrying on profession shall, if his gross receipts in profession exceed 14 [twenty-five] lakh rupees in … 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"? A] If person carrying on business, his total total sales, turnover, gross receipts is Rs. Even the Old Regime and NEW Regime too. 1. With effect from 01/04/2020, that is from assessment year 2020-21, this provision is amended as below: The threshold limit has been revised to increase it for a person carrying on business from Rs. 1 crores but does not exceeds 5 crore ]. AY 2020-21 this due date of filing return of income for tax audit assessees has been amended to 31st Oct,2020. Today, we learn the provisions of section 44AB of Income-tax Act 1961. 3CA/3CB and ​3CD. 3CB and the prescribed particulars are to be reported in Form No. 2021-22…Please refer Bare Act and reply please after checking. So, first of all, let us read what the bare act has to say: (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, Provided that in the case of a person whose—, (a) aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent of the said amount; and. Kindly confirm. persons to whom Sec 44AD(1) applies). Is the new amendment giving an option to assessee (who satisfy the conditions) to refrain from filing tax audit report? 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]. According to the amendment the due date of filing tax audit report will be one month prior to the due date for furnishing the return of income u/s 139(1). Section 44AB of the Income Tax Act contains provisions pertaining to the tax audit under the Income Tax Audit. 3CA - Audit report under section 44AB of the Income-tax Act, 1961, in a case where the accounts of the … If a person files his return under section 44AD and his turnover is up to 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. Persons like company or co-operative society are required to get their accounts audited under their respective laws. 94/2020-Central Tax, Removal of Director Under Companies Act, 2013 with Notice & Resolution formats, GST Moving Towards Inspector Raj……. Therefore, it is proposed to amend these sections so that reference to the monetary limit specified in clause (a) or clause (b) of section 44AB of the Act is substituted with Rs. 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? The amended provision of section 44AB is effective for financial year 2020-21 relevant to the assessment year 2021-22. These amendments of 44AB is applicable from A.Y. How much? In other words, more than 95% of the business transactions should be done through banking channels in order to avoid tax audit. 23 of the Guidance Note[2005 Edition] Clause 17(h) of Form 3CD Para 35 of the Guidance Note (Subsequent changes have been made in section 40A(3) by the Finance Act, 2008 and Finance (No. i.e. d) Tax audit is in purview of 44AD. 08 September 2014 I have to Audit But there is a problem with in Auditor info.Software is showing there 6 option. Clause. FORM NO. Hope this ambiguity is resolved by a clarification soon. If any person who is required to get his audit done under this section but fails to do so before the specified date shall be liable to penalty under section 271B of 0.50% of the turnover/gross receipts subject to a … Because , Sec 44 AD [1] provisions applicable to eligible business. 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. 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? 25 lacs. 2] His aggregate of all payments in cash during the previous year does not exceeds 5 % of such payments. AY 20-21). In such case, there are two possibilities as below : ‘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 % of 6 % [ if his gross total turnover or receipts recd in banking mode] . 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. 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. A tax audit is an examination of a taxpayer’s books of accounts. (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. Though meticulous care has been taken but the author assumes no liability in respect of any loss/damage incurred while acting on the basis of information provided. Thanks. The two major amendments made by Finance Act, 2020 in respect of tax audit are as follows. 5 crores for the tax audit is inserted below clause (a) to section 44AB. In this article I have tried to clarify the provisions by simplifying the language and presenting the information in the form of a chart. Assessment Year 2020-21, the threshold limit for tax audit u/s 44AB(a), for a person carrying on business, is increased from Rs. c) Tax audit is in purview of 44AE, 44BB & 44BBB . 4. Clause (b) If the assessee is carrying on profession and his gross receipts exceed twenty five lakh rupees in the relevant previous year. Plz read the bare act again. 25 lakh during the relevant year. In this scenario, . [ that above Rs. 1 crores but does not exceeds 2 crore ]. However, tax audit may be applicable under clause (b), (c), (d) & (e) when Sec 44AB is read with Sec 44AD. 1 crore to Rs. 4 crores. Clause 44AB(c)-ii 5. Because,  In Sec 44 AB , there is no such exclusions or exceptions is provided or in Sec 44AD is not amended to suit the amendment in the Sec 44 AB. Meaning of Certain Terms used in section 194J . Well i have come across different views on this Issue…, itatonline.org/articles_new/demystifying-applicability-of-tax-audit-u-s-44ab-of-the-income-tax-act-1961/. Advertisement. A person is having commission business, 44AD not applicable to it, turnover is 80 Lakhs, and profit is 3 percent, Is audit applicable?? 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. The only option left is to go for audit u/s 44AB(e) which again is a debatable topic. Section 44AB of the Income Tax Act, 1961 includes the provisions for the tax audit. 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. This was accompanied by a amendment in Explanation to Sec 44AB. CA Shirish Vinchurkar – Chartered Accountants, Chalisgaon, email : casjv12@gmail.com. 2 crores. (b) A person carrying on profession: The total gross receipts exceeds rs. 2 crore, provisions of Sec 44 AD [1] is not applicable to him. Disclaimer: The information contained in this article is intended solely for the dissemination of information and doesn’t aim at soliciting work in any manner. (b) aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent of the said payment, this clause shall have effect as if for the words “one crore rupees”, the words “five crore rupees” had been substituted; or, (b) carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year; or, (c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or, (d) carrying on the profession shall, if the profits and gains from the profession are deemed to be the profits and gains of such person under section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or. 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