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Exclusion of certain specified person from requirement of audit of accounts under section 44AB
The existing provision of section 44AB of the Act, inter-alia provides that every person carrying on the business is required to get his accounts audited if the total sales, turnover or gross receipts in the previous year exceeds one crore rupees. The threshold limit for applicability of presumptive taxation in case of eligible business carried on by eligible person under section 44AD was increased to two crore rupees from one crore rupees with effect from 1st April, 2017 relevant to Assessment year 2017-18 by Finance Act, 2016. Further vide press release dated 20th June, 2016, it was clarified that if an eligible person opts for presumptive taxation scheme as per section 44AD(1) of the Act, he shall not be required to get his accounts audited if the total turnover or gross receipts of the relevant previous year does not exceed two crore rupees.
In light of the above legislative changes and to reduce the compliance burden of the small tax payers and facilitate the ease of doing business, it is proposed to amend the section 44AB to exclude the eligible person, who declares profits for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, total turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year, from requirement of audit of books of accounts under section 44AB.
This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent years.
Extract of relevant clause from Finance Bill, 2017
Amendment of section 44AB.
20. In section 44AB of the Income-tax Act,—
(i) before the first proviso, the following proviso shall be inserted, namely:—
“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:”;
(ii) in the first proviso, for the words “Provided that”, the words “Provided further that” shall be substituted;
(iii) in the second proviso, for the words “Provided further”, the words “Provided also” shall be substituted.