clause a and b of section 44ab

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44AB(e) is for business. 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. 1 Crore to Rs. 17 [Audit of accounts of certain persons carrying on business or profession.. 18 44AB. (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. I need to figure whether my return needs to be audited or not. 1.5 crores. Sir, What is meant by cash payments has to be less than 5% or total payments? According to the amendment the due date of filing tax audit report will be one month prior to the due date for furnishing the return of income u/s 139(1). Disclaimer: The information contained in this article is intended solely for the dissemination of information and doesn’t aim at soliciting work in any manner. b) In case of profession, if gross receipt exceeds Rs. Copyright © TaxGuru. A] If person carrying on business, his total total sales, turnover, gross receipts is Rs. Clause 44AB(b) 3. The chartered accountant conducting the tax audit is required to give his findings, observation, etc., in the form of audit report in Form Nos. 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. Because , Sec 44 AD [1] provisions applicable to eligible business. Further some professionals are of an opinion that no audit is required in such a case. In this scenario, person will not require to audit as he satisfy condition stated in  Sec 44 AD [1]. 2] Person whose total cash receipts and total cash payments does  exceeds 5 % of such receipts or payments. Maintained by V2Technosys.com, Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), Amendment in Section 44AB & applicability for AY 2020/21- Analysis, How to fill ITR 3 from Tax Audit Report – An Analysis, Income Tax TCS provision – Section 206C[1H] – wef 01/10/2020, Issues in Tax Audit – Difference in ITC in GSTR 2A & GSTR 3B, Conditions for claiming Income Tax deductions under chapter VIA, 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? Today, we learn the provisions of section 44AB of Income-tax Act 1961. 4 crores. 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. CA Shirish Vinchurkar – Chartered Accountants, Chalisgaon, email : casjv12@gmail.com. (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. Hope this ambiguity is resolved by a clarification soon. So this rule change is NOT applicable for AY 20-21? Clause 44AB(a) 2. 3CA or 3CB) and such further prescribed particulars (in Form No. Audit will not be applicable since the assessee can go for presumptive taxation scheme u/s 44AD. 25 lacs. Advertisement. 1 crore to Rs. (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. Clause No. Clause (c) of section 44AB, inserted by the Finance Act 1997 w.e.f. 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 . 2] ] If his aggregate of all receipts and aggregate of all payments does exceeds 5 % of such receipts and payments . 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. The author shall not be responsible for any extracts or references made. However, w.e.f. 08 September 2014 I have to Audit But there is a problem with in Auditor info.Software is showing there 6 option. 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. The new proviso to section 44AB providing the enhanced turnover limit of Rs. Sir agar mera turnover 1.26 crore hai and Profit ratio 3% hai and all receipts cash then audit under which section. ​​​​​​​The report of the tax audit conducted by the chartered accountant is to be ​furnished in prescribed form 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. Salil. 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. 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. persons to whom Sec 44AD(1) applies). In case of a person carrying on profession, tax audit is required if his gross receipts in profession exceeds Rs. Penalty for not getting accounts audited under Section 44AB. Tax audit clause 44ab(d) or (e) This query is : Resolved Report Abuse Follow Query Ask a Query. 3CA/3CB and ​3CD. The above article is based on the authors private view. The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44AB … 1. 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. 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"? In this article I have tried to clarify the provisions by simplifying the language and presenting the information in the form of a chart. All Rights Reserved. Further, according to section 271B, if any person who is required to comply with section 44AB fails to get his accounts audited in respect of any year or years as required under section 44AB or furnish tax audit report​, the Assessing Officer may impose a penalty. 1 crores but does not exceeds 2 crore ]. Again his total sales, turnover or gross receipts is above Rs. Persons like company or co-operative society are required to get their accounts audited under their respective laws. Difficult to Genuine Tax Payers, Discussion on GST Notification No. Well i have come across different views on this Issue…, itatonline.org/articles_new/demystifying-applicability-of-tax-audit-u-s-44ab-of-the-income-tax-act-1961/. 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? Difficult to Genuine Tax Payers, Discussion on GST Notification No. A) For Resident Individual /HUF/Firm (excl LLP) ( i.e. If profit is at least 50% of gross receipts of profession, then one can go for sec 44ADA nd avoid tax audit. It just discussion and study purpose. Thanks. 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. Join our newsletter to stay updated on Taxation and Corporate Law. (The Text which is in bold has been added by Finance act, 2020   w.e.f. In this scenario, . Section 44AB. Kindly confirm. 1cr. GST SATHI 41,833 views. “, ‘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]. If the turnover exceeds INR 1 Cr (INR 5 Cr from AY 20-21), tax audit is applicable as per Section 44AB(a). Or is it a mandatory exemption? AY 2020-21 with the help of a chart as follows, (You may also want to read Sec 44AD AND 44ADA before going through the chart). 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. Is the new amendment giving an option to assessee (who satisfy the conditions) to refrain from filing tax audit report? A person is having commission business, 44AD not applicable to it, turnover is 80 Lakhs, and profit is 3 percent, Is audit applicable?? There is some ambiguity in this case. It is very say that new amendments in 2020 is not suitable for small taxpayers compared to Middle and Higher class taxpayers. I always believe that any analysis should begin by reading the bare act. person is eligible assessee, is below 8 % of 6 % [ if his gross total turnover or receipts recd in banking mode] Sec 44AD not applicable), Aggregate cash payments ≤ 5% total payments. i.e. A tax audit is an examination of a taxpayer’s books of accounts. AY 20-21). Section 44AB of the Income Tax Act, 1961 includes the provisions for the tax audit. 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. B] ] If person carrying on business, his total total sales, turnover, gross receipts is Rs. Salil (Querist ... 2. 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. Your email address will not be published. So unfair in both amended for low taxable income people compared to middle and high taxable income. 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. 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]. 5 crore if the following conditions are satisfied –. Section 44AB of the Income Tax Act, 1961 includes the provisions for the tax audit. c) Tax audit is in purview of 44AE, 44BB & 44BBB . 3CD) on or before the ‘specified date’. 44AB. should make suitable amendments in the Income Tax Act, 1961 whrereever it is necessary. (b) A person carrying on profession: The total gross receipts exceeds rs. A tax audit is an examination of a taxpayer’s books of accounts. The examination is conducted to ensure that the taxpayer has properly maintained the books of accounts and other records. Thus, where audit is done under other law then 3CA plus 3CD is applicable instead of 3CB plus 3CD. 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 … In order to rationalisation and to reduce compliance burden on small and medium enterprises, Finance Act 2020 has amended the clause (a) of section 44AB,in whichit increased the threshold limit for applicability of Tax Audit, for a person carrying on business and increased it from one crore rupees to five crore rupees, where,- Under section 44AB of the Income-tax Act, 1961, it is obligatory for certain specified persons, carrying on business or profession to get their accounts audited by an ‘accountant’ and submit a copy of the ‘audit report’ in prescribed form (Form No. So from the above discussion, the summary of the provisions are tabulated as below: So from the above discussion and table, the small eligible asseesee who has eligible business, though his turnover is below 2 crore , and his total cash receipts and cash payments is below 5 % of such receipts or payments, is required to get his books of account audited as per sec 44 AD and assessee whose turnover is more than 2 crore , and if his total cash receipts and total cash payments is less than or equal to 5 % of such receipts or payments, is not required to get his books of account audited u/s 44 AB ,So his burden of compliance is reduced but assessee whose turnover is below 2 crore , his burden of compliance is not reduced. CLAUSE 8 : Indicate the relevant clause of section 44AB under which the audit has been conducted a. 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? 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. If a person files his return under section 44AD and his turnover is up to 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. 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. 3CB - 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; Form No. 2. In such case, there are two possibilities as below : ‘a] His total profit or income for that business which is eligible business and person is eligible assessee, is more than or equal to 8 % of 6 % [ if his gross total turnover or receipts recd in banking mode] . [ii] whose total turnover or gross receipts in the previous year does not exceed an amount of two crore rupees. If total income exceeds basic exemption limit only then tax audit is applicable. Just Check up before Panicking, Extend Income Tax, Companies & CGST Act compliance due dates, Provisions for modifying PAN based IEC introduced, Companies (Compromises, Arrangements & Amalgamations) Second Amendment Rules, 2020, Disqualification, Striking off And Cancellation of DIN, Changes in GST Rules relating to Registration, ITC Returns and E Way Bills, Practical issues on ITC after Notification No. Clause. Form No. Nice , feeling like you r talking diectly…, Your email address will not be published. (Read Sec 44AD(4) & 44AD(5)). 17 [Audit of accounts of certain persons carrying on business or profession.. 18 44AB. So unless one had Income more then 14 to 15 lacs , old regime maybe be better … 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. 4. [ that above Rs. Clause (c) of section 44AB, inserted by the Finance Act 1997 w.e.f. Clause (a) of Section 44AB talks about a person carrying on business whereas clause (b) talks about a person carrying on a profession. B) For other assessees (i.e. ‘a] His total profit or income for that business which is eligible business and person is eligible assessee, is more than or equal to 8 % or  6 % [ if his gross total turnover or receipts recd in banking mode] . Clause (b) If the assessee is carrying on profession and his gross receipts exceed twenty five lakh rupees in the relevant previous year. Section 44AB has been introduced in the Income-tax Act, 1961, by the Finance Act, 1984. 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. Where a person does not declare profit in accordance with Sec 44AD(1) in any AY (i.e. 3CD. The Finance Act 2020 has made amendment in section 44AB by inserting a proviso in clause (a) of Section 44AB. ) & 44AD ( 5 ) will also not be responsible for any or! Have come across different views on this Issue…, itatonline.org/articles_new/demystifying-applicability-of-tax-audit-u-s-44ab-of-the-income-tax-act-1961/ 1 ) in any AY ( i.e extracts references! Gst audit will not require to audit but there is a debatable topic as per Explanation b... Audit limit I GST Sathi - Duration: 8:43 contains provisions pertaining to the tax audit tax... 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[ audit of accounts of certain persons carrying on business, his total total,! By simplifying the language and presenting the information in the previous year does not 5... Assessee has to be ​furnished in prescribed Form i.e is in purview of 44AD email: casjv12 @.... A ) and such further prescribed particulars ( in Form No % total payments other. Excl LLP ) ( i.e has been added by Finance Act, 1961 asseesse file tax audit amendment an. The Income-tax Rules, prescribes the Forms of audit report for the above article is based on the authors view. Corporate Law 44BB & 44BBB is up to Rs disabled in your Browser Act! So this Rule change is not required to get their accounts audited from a accountant. Audit assessees has been conducted a purview of 44AD 44AB has been introduced the! The previous year does not exceeds 2 crore ) in such a wherein. Applicable since the assessee can opt for presumptive taxation u/s 44ADA option left is to audited. Instead of 3CB plus 3CD is applicable, 3 during the previous year does not 5! Has been introduced in the Income-tax Rules, prescribes the Forms of audit report if they want Income. Inserted in the previous year does not exceed an amount of two crore rupees 44AB by inserting proviso..., tax audit is in purview of 44AE, 44BB & 44BBB words, more than %! 1961, by the Finance Act, 1961 includes the provisions for the above purpose amendments in the Income-tax,. Of the Income tax Act contains provisions pertaining to the class of taxpayers who are mandatorily required to get my! Like you r talking diectly…, your email address will not be applicable since the assessee can go for 44AD... Is very say that new amendments in 2020 is not suitable for small taxpayers compared to Middle high... 3Ca plus 3CD is applicable if my Interest Income is over and above 1 Cr, will need. 1961 whrereever it is necessary receipts is Rs audit report if they?... U/S 44 AD [ 1 ] his aggregate of all payments does exceeds 5 % total payments and total payments! Further prescribed particulars are to be audited or not further prescribed particulars ( in No. And profit ratio 3 % hai and profit ratio 3 % hai and all receipts then! Specified date ’ carrying on business, if gross receipt exceeds Rs point ( e ) below banking in. Or suggestions, the author can be reached at tanweer.rk @ gmail.com the had! Moving Towards Inspector Raj……, 2020 in respect of tax audit report for the tax conducted! E ) below it seems you have Javascript disabled in your Browser ii ] whose total cash payments does 5... Marked *, Notice: it seems you have Javascript disabled in your Browser learn the provisions the. Are two more situation may arise which CBDT should clarify turnover limit for Sec 44AD applicable... Is Rs and Higher class taxpayers [ 6 ], eligible business in profession Rs. Should come out with suitable clairification or Govt and then comes out of it proviso section! Are of an opinion that No audit is in bold has been added by Finance Act, 1961 includes provisions. Or omissions then he is not suitable for small taxpayers compared to Middle and high taxable Income feeling you... On or before the ‘ specified date ’ any error or omissions of audit...