A minor amendment in section can change the whole situation and scenario. The same was happened in sec 44AB in 2016 and now in 2020 budget.
Before 2016, the turnover limit for sec 44AB and Sec 44AD were identical. Thereafter, in Budget 2016, the turnover limit for Sec 44AD has been raised to INR 2 Cr from INR 1 Cr, while no such change has been made in Sec 44AB(a) in this regard. Hence, they intact the turnover limit of INR 1 Cr for the assessee, other than eligible assessee for sec 44AD. This situation creates anomaly.
Further, in Budget 2020, Govt introduces one more slab of turnover of INR 5 Cr for the person, whose aggregate of all amount received (incl sales/turnover/gross receipts) AND aggregate of all payments made (incl expenditure), in Cash, in Py, does not exceeds 5% of such payments, and straightway exempted such category from Tax Audit.
After proposed changes in Sec 44AB, it would read as follows;
44AB. Every person, —
‘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
(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’;
Now practically, there are 3 slabs of turnover for the business class assesee. After considering all factors, we can summarise the combined reading of Sec 44AB and Sec 44AD as follows;
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