Clarification on Tax Audit requirement for the persons whose turnover does not exceed 10 Crore

Section 44AB

Every person carrying on business, whose turnover does not exceed Rs. 10 Crore, is not required to get their books of accounts audited subject to following conditions:

a. Aggregate of all amount received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed 5% of all receipt.

AND

b. Aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed 5% of the all payments.

If any payment or receipt, as the case may be, by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be treated as payment or receipt in cash.

Tax Audit written on paper notes places on white background

Section 44AD

An eligible assessee (Individual, HUF or Partnership Firm – resident), whose Turnover does not exceed Rs. 2 Crore may declare profit at least 8% (in case of business through cash) or 6% (in case of business through other than cash).
Section 44AD is not applicable to

a. Professionals,

b. Persons earning income in the nature of commission or brokerage

c. Person carrying on any agency business

d. Person carrying on business of plying, hiring or leasing goods carriages referred in section 44AE.

Due Dates

Due date to file return of Income (in case of other than tax audit): 31/12/2021

Due date of Tax Audit: 15/01/2022

Due date to file return of Income (in case of Tax Audit): 15/02/2022

Author Bio

Qualification: CA in Practice
Company: Ankit Mahendra & Associates
Location: Lalitpur, Uttar Pradesh, India
Member Since: 13 Jul 2020 | Total Posts: 15
I am qualified chartered accountant, engaged in practice and having experience in Income Tax return filing, tax audit, Goods & Services Tax return filing, GST audit, various registration and incorporation etc. I believe in help to each other in our society in the way as much as possible. View Full Profile

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9 Comments

      1. b j prasad says:

        speculative loss 40 lakhs on share trading turnover of rs 2.6 crores was shown in itr 3. in the end, it shows no errors found but when we go for validation, system says return will not be uploaded since loss was shown in “no account cases” but p&l a/c and balance sheet tax audit report not attached

        1. CA Ankit Jain says:

          First you have to check that the turnover, you are taking, is correct. Because as per income tax the definition of turnover for speculation business on shares is different.
          If your Turnover is correct, then as per 44AD you have to declare profit less than 8% (in cash transaction) or 6% (other than cash transaction) , otherwise tax audit will be require as per 44AB(e).

          1. b j prasad says:

            many many thanks, shri ankit clarifying speculative turnover exclusivity for tax audit. a deeper study shows equity f n o turnover will be treated as busines loss/gain and equity trading will be treated speculative business. i will calculate f n o turnover separately and try. regards

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