b) In case of profession, if gross receipt exceeds Rs. Kindly confirm. It just discussion and study purpose. Clause 8: Indicate the Relevant Clause of section 44AB under which the audit has been conducted: Verify the applicability of clauses of sec. (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. So it is expected that CBDT should come out with suitable clairification or Govt. 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). 44AB. Form No. 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”. In Second possibility, as he does not satisfy two conditions of maximum 5 % of cash receipts and cash payments, then he has to get his books of audited as per provisions of sec 44 AB [a] of the Income Tax Act, 1961. These provisions have effect from.AY 2020-21, A pensioner is getting more than 5 lakhs Rupees as salary income and getting 2 lakhs Rupees from profession (with 51% as expenditure). Hope this ambiguity is resolved by a clarification soon. a) In case of business, if turnover/gross receipt exceeds Rs. 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. And as per explanation [b][i] to sec 44 AD [6], eligible business means. Clause 44AB(a) 2. 3CD.] Salil. Clause No. Difficult to Genuine Tax Payers, Discussion on GST Notification No. 2. 1) Up to AY 2019-20, a person carrying on business was compulsorily required to get his accounts audited by a chartered accountant, if his total sales, turnover or gross receipts (as the case may be) in business for the year exceeds Rs. Clause 23 of the Bill seeks to amend section 44AB of the Income-tax Act relating to the audit of accounts of certain persons carrying on business or profession. 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 … From financial year 2016-17 this limit is raised to Rs. CLAUSE 8 : Indicate the relevant clause of section 44AB under which the audit has been conducted a. (b) in the case of a person who carries on business or profession, but not being a person referred to in clause ( a ), be in Form No. 30th September of the relevant assessment year. Audit will not be applicable since the assessee can go for presumptive taxation scheme u/s 44AD. 94/2020-Central Tax, Removal of Director Under Companies Act, 2013 with Notice & Resolution formats, GST Moving Towards Inspector Raj……. 1.5 crores. However, according to section 271B​, no penalty shall be imposed if reasonable cause for such failure is proved. This was accompanied by a amendment in Explanation to Sec 44AB. As per Section 44AB of the Income Tax Act, 1961, every person carrying on business is required to get his accounts audited , if his total sales, turnover or gross receipts in business exceeds Rs. 5. 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. 2021-22…Please refer Bare Act and reply please after checking. we are co operative society and audited co operative auditors every years and my turnover 3 crore we are also audited u/s 44 AB of income tax or not. If the turnover exceeds INR 1 Cr (INR 5 Cr from AY 20-21), tax audit is applicable as per Section 44AB(a). The above article is based on the authors private view. So this rule change is NOT applicable for AY 20-21? 5 crore if the following conditions are satisfied –. As per the new proviso, the tax audit turnover limit would be INR 5 Crores in case the following two conditions are satisfied: However, w.e.f. 2. If total income exceeds basic exemption limit only then tax audit is applicable. Accordingly 44AD(5) will also not be applicable. The five clauses of section 44AB under which tax audit can be carried out are – a. Section 44AB of the Income Tax Act, 1961 includes the provisions for the tax audit. Meaning of Certain Terms used in section 194J . Clause 44AB(b) 3. Appreciable post. However, tax audit may be applicable under clause (b), (c), (d) & (e) when Sec 44AB is read with Sec 44AD. B] ] If person carrying on business, his total total sales, turnover, gross receipts is Rs. Copyright © TaxGuru. Thanks. Your email address will not be published. Section 44AB of the Income Tax Act deals with the audit of accounts of certain individuals. 3CB. Can you please tell me their slabs or provisions 1. 50 lakhs in the previous year. 44AB(e) is for business. Again his total sales, turnover or gross receipts is above Rs. It means in above case, if person shows his profit below 8 % of 6 % of his total sales etc, he will not require to get his books of account audited . In this article I have tried to clarify the provisions by simplifying the language and presenting the information in the form of a chart. Clause (c) of section 44AB, inserted by the Finance Act 1997 w.e.f. 1. A) For Resident Individual /HUF/Firm (excl LLP) ( i.e. Thus, For AY 20-21 the due date for filing tax audit report for FY 2019-20 corresponding to the assessment year 2020-21 will be 30th Sept, 2020 (one month prior to 31st Oct, 2020), (Recent update: On account of the Covid-19 situation , the government in a press conference dated May 13, 2020 announced that the income tax return (ITR) filing deadline for FY 2019-20 for all persons has been extended  from July 31, 2020 & October 31,2020, 2020 to November 30, 2020 and tax audit report due date  from September 30, 2020 to  October 31, 2020 ), Now we will understand all the provisions of Sec 44AB wef. ​​​​​​​The report of the tax audit conducted by the chartered accountant is to be ​furnished in prescribed form i.e. c) Tax audit is in purview of 44AE, 44BB & 44BBB . Yes, will make necessary changes. Explanation. Or is it a mandatory exemption? Is it really so? Now it is categorically mentioned in all these sections that the TDS/TCS will required to be deducted, if sales, gross receipts or turnover will exceed, the monetary limit specified in clause (a) or clause (b) of section 44AB of the Act Rupees One Crore in case of the business or Rupees Fifty Lac in case of the profession, as the case may be. 1. This is the perfect analysis of the 2 sections. Limit / Criteria. Clause (b) If the assessee is carrying on profession and his gross receipts exceed twenty five lakh rupees in the relevant previous year. Today, we learn the provisions of section 44AB of Income-tax Act 1961. 17 [Audit of accounts of certain persons carrying on business or profession.. 18 44AB. 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. 4. 3CB and the prescribed particulars are to be reported in Form No. Section 44AB of the Income Tax Act, 1961 includes the provisions for the tax audit. 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 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. 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. The only option left is to go for audit u/s 44AB(e) which again is a debatable topic. 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. Its available online on the income tax departments website. [ii] whose total turnover or gross receipts in the previous year does not exceed an amount of two crore rupees. The new proviso to section 44AB providing the enhanced turnover limit of Rs. Please go through and let me no , if there is any error or omissions. Thanks. The provisions of Section 44AB have been amended by the Finance Act, 2020 giving rise to major confusion in the minds of businessmen and professionals alike. Section 44AB has been introduced in the Income-tax Act, 1961, by the Finance Act, 1984. However, for a person 1 crore. 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. 2] His aggregate of all payments in cash during the previous year does not exceeds 5 % of such payments. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. Thank for such a wonderful chart and explanation. However GST Audit will be applicable if registered under GST (GST Audit threshold limit being Rs 2 crore). Recently, we have discussed in detail section 44AA (maintenance of accounts by certain persons carrying on profession or business) of IT Act 1961. I need to figure whether my return needs to be audited or not. So because of such amendment there some strange situation may arise which CBDT should clarify. 1 Crore to Rs. 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. The examination is conducted to ensure that the taxpayer has properly maintained the books of accounts and other records. A tax audit is an examination of a taxpayer’s books of accounts. 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. but New Regime is better for net taxable income above 15Lacs. In this scenario, person will not require to audit as he satisfy condition stated in Sec 44 AB [a] and Sec 44 AD [1] ‘b] His total profit or income for that business which is eligible business and. d) Tax audit is in purview of 44AD. Persons like company or co-operative society are required to get their accounts audited under their respective laws. If my Interest Income is over and above 1 cr, Will I need to get audited my books under sec 44AB. Section 44AB of Income Tax Act. Clause 44AB(c)-ii 5. Salil. 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. 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. 3CD. 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]. Clause (c) of section 44AB, inserted by the Finance Act 1997 w.e.f. 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 … 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. Because Section 44AB reads as under: "Audit of accounts of certain persons carrying on business or profession”. While the turnover limit for Sec 44AB is INR 1 Cr, turnover limit for Sec 44AD is INR 2 Cr. In your chart of tax audit — pt no 4 & 5 – if turnover is > than 1 crore & < 2 crore and < 1 crore. However, GST Audit may be applicable if registered under GST (GST Audit threshold limit being Rs 2 crore). GST SATHI 41,833 views. Tax audit clause 44ab(d) or (e) This query is : Resolved Report Abuse Follow Query Ask a Query. Relevant Clause of 44AB: Description: Clause (a) In case the assessee is carrying on business and his total sales, turnover or gross receipts as the case may be, exceeds one crore in the relevant previous year. 8:43. 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. Maintained by V2Technosys.com, Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), Section 44AB: An Analysis of Tax Audit provisions after Finance Act, 2020, Summary of GSTR 3B Compliance post the 40th GST Council Meeting (Due dates, Interest and Late fees), 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? persons to whom Sec 44AD(1) applies). 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? 50 Lakhs. 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. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. 3CA - Audit report under section 44AB of the Income-tax Act, 1961, in a case where the accounts of the … Can such asseesse file tax audit report if they want? 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. Is such a case, it shall be sufficient if such person gets the accounts of such business or profession audited under such other law and obtains the report of the audit as required under such other law and also a report by the chartered accountant in the form prescribed under section 44AB, i.e., Form No. 17 [Audit of accounts of certain persons carrying on business or profession.. 18 44AB. Salil (Querist ... 2. Section 44AB gives the provisions relating to the class of taxpayers who are mandatorily required to get their accounts audited from a chartered accountant. In this scenario, . 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 … It is very say that new amendments in 2020 is not suitable for small taxpayers compared to Middle and Higher class taxpayers. 1 crore in case of the business or Rs. (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. The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44AB … Join our newsletter to stay updated on Taxation and Corporate Law. Since in todays world many small salaried or business have some commitment under 80C and other deductions which results into lower Net Taxable Income under Old Regime. 1 crores but does not exceeds 5 crore ]. Sir agar mera turnover 1.26 crore hai and Profit ratio 3% hai and all receipts cash then audit under which section. 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. There is some ambiguity in this case. 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. The tax audit is carried on to ensure that the payer has a fully maintained book of records and accounts, that properly depict the taxpayer’s income. For this purpose, section 44AB of the Income Tax Act, 1961 is amended vide clause 23 of the Finance Bill, 2020. The assessee can opt for presumptive taxation u/s 44ADA. Section 44AB. A tax audit is an examination of a taxpayer’s books of accounts. Sir, What is meant by cash payments has to be less than 5% or total payments? 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 25 lakh during the relevant year. So unless one had Income more then 14 to 15 lacs , old regime maybe be better … Tax Audit l Section 44AB of Income Tax Act,1961 l New Tax Audit l Tax audit limit I GST Sathi - Duration: 8:43. Join our newsletter to stay updated on Taxation and Corporate Law. FORM NO. 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. Section 44AB of the Income Tax Act contains provisions pertaining to the tax audit under the Income Tax Audit. Section 44AB of the Income Tax Act contains provisions pertaining to the tax audit under the Income Tax Audit. Because , Sec 44 AD [1] provisions applicable to eligible business. However, w.e.f. So unfair in both amended for low taxable income people compared to middle and high taxable income. Clause. Copyright © TaxGuru. In order to submit a comment to this post, please write this code along with your comment: 748e6fecf2dae2ec32886f3bdf7bc508. In this case , assessee has to get his books of account audited as per provisions of sec 44 AD [1]. 3CA/3CB and ​3CD. So if the provisions of sec 44 Ab and provisions of Sec 44 AD is not applicable to him, then there is not any limit regarding % of profit to Total Sales. The prescribed particulars ( in Form No will be applicable if registered under GST ( GST audit threshold being. Satisfied – mean that if the following conditions are satisfied – such case. Get audited my books under Sec 44AB is INR 1 Cr, turnover limit for Sec (. 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