clause a and b of section 44ab

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 … 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 That is in FY 2015-16, if you have opted 44AD and not opted in FY 2016-17 ,then 44AD(4) applies ,meaning thereby tax audit is applicable per section 44AD(e). 3CA and Form 3CD. Thank for such a wonderful chart and explanation. 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. The audit under section 44AB aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfillment of other requirements of the Income-tax Law. 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. A] If person carrying on business, his total total sales, turnover, gross receipts is Rs. 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. As per the new proviso, the tax audit turnover limit would be INR 5 Crores in case the following two conditions are satisfied: If profit is at least 50% of gross receipts of profession, then one can go for sec 44ADA nd avoid tax audit. Clause 44AB(b) 3. 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. In this situation there are two possibilities  as below: 1] If his aggregate of all receipts and aggregate of all payments does not exceeds 5 % of such receipts and payments. However, GST Audit may be applicable if registered under GST (GST Audit threshold limit being Rs 2 crore). 1 crore in case of the business or Rs. 1] His aggregate of all receipts in cash during the previous year does not exceeds 5 % of such receipts. 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. 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. 25 lacs. 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. 1 crore to Rs. 2] His aggregate of all payments in cash during the previous year does not exceeds 5 % of such payments. The Finance Act 2020 has made amendment in section 44AB by inserting a proviso in clause (a) of Section 44AB. 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. 3CA - Audit report under section 44AB of the Income-tax Act, 1961, in a case where the accounts of the … A tax audit is an examination of a taxpayer’s books of accounts. 5 crores for the tax audit is inserted below clause (a) to section 44AB. (2) The particulars which are required to be furnished under section 44AB shall be in Form No. The above article is based on the authors private view. Nice , feeling like you r talking diectly…, Your email address will not be published. Meaning of Certain Terms used in section 194J . 3CB and the prescribed particulars are to be reported in Form No. b) In case of profession, if gross receipt exceeds Rs. 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"? 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. Difficult to Genuine Tax Payers, Discussion on GST Notification No. The author shall not be responsible for any extracts or references made. A person is having commission business, 44AD not applicable to it, turnover is 80 Lakhs, and profit is 3 percent, Is audit applicable?? Section 44AB of Income Tax Act. 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”. Can you please tell me their slabs or provisions 1. thanks . Audit report under section 44AB of the Income-tax Act,1961 in a case where the accounts of the business or profession of a person have been audited under any other law: Download: Form 3CB-3CD: Audit report under section 44AB of the Income-tax Act,1961, in the case of a person referred to in clause (b) of sub-rule (1) of rule 6G: Download: Form 3CEB Section 44AB. 1. Recently, we have discussed in detail section 44AA (maintenance of accounts by certain persons carrying on profession or business) of IT Act 1961. If total income exceeds basic exemption limit only then tax audit is applicable. Limit / Criteria. The two major amendments made by Finance Act, 2020 in respect of tax audit are as follows. In Present, if an assessee claims that his profits and gains from ‘eligible business’ are less than 8% or 6% or 50% of the total turnover or gross receipts [as the case may be as per Section 44AD and 44ADA] and whose total income exceeds the maximum amount not chargeable to tax, the assessee shall maintain the books of account as prescribed under Section 44AA of the IT Act [as per u/s 44AA(iv) or Section 44ADA(4) as the case may be] and get them audited under section 44AB … Section 44AB gives the provisions relating to the class of taxpayers who are mandatorily required to get their accounts audited from a chartered accountant. 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. 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. In order to submit a comment to this post, please write this code along with your comment: ade3c276b2177f4da990677856cad2a3. 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). 25 lakh during the relevant year. “, ‘b] His total profit or income for that business which is eligible business and person is eligible assessee, is below 8 % of 6 % [ if his gross total turnover or receipts recd in banking mode]. d) Tax audit is in purview of 44AD. Its available online on the income tax departments website. 1 crores but does not exceeds 5 crore ]. I need to figure whether my return needs to be audited or not. Etc. 30th September of the relevant assessment year. but New Regime is better for net taxable income above 15Lacs. Tax Audit under Section 44AB of the Income Tax Act is the examination and review of the books of accounts of a taxpayer having income from business or profession.The taxpayer should appoint a practicing CA i.e. 3CA/3CB and ​3CD. [ that above Rs. 1. Again his total sales, turnover or gross receipts is above Rs. 1 Crore to Rs. If total income exceeds basic exemption limit only then tax audit is applicable, 3. 50 lakhs in the previous year. How much? 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. In case of a person carrying on profession, tax audit is required if his gross receipts in profession exceeds Rs. Provisions of Sec 44AB will not applicable to him because Sec 44 AB provided clearly that –, “ 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 the 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. There is some ambiguity in this case. Salil (Querist ... 2. 4. This section applies in a case wherein section 44AD(4) applies. Clause 44AB(c)-ii 5. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. i.e. Thus, he has to compulsorily get his accounts audited u/s 44AB(e) for that AY and subsequent 5 AYs if the turnover ≤ 2 crores and Total income > basic exemption limit during such 6 years. 3CD) on or before the ‘specified date’. (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. 2] ] If his aggregate of all receipts and aggregate of all payments does exceeds 5 % of such receipts and payments . 3CB. (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. 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. In this article I have tried to clarify the provisions by simplifying the language and presenting the information in the form of a chart. 1cr. 2 crores. I always believe that any analysis should begin by reading the bare act. 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 … 3CA or 3CB) and such further prescribed particulars (in Form No. GST SATHI 41,833 views. Should begin by reading the bare Act and reply please after checking not... Cause for such failure is proved GST audit threshold limit being Rs 2 crore, of. Is meant by cash payments does exceeds 5 % of such payments Auditor info.Software is there! 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