As per the new proviso, the tax audit turnover limit would be INR 5 Crores in case the following two conditions are satisfied: 1. While the turnover limit for Sec 44AB is INR 1 Cr, turnover limit for Sec 44AD is INR 2 Cr. If my Interest Income is over and above 1 cr, Will I need to get audited my books under sec 44AB. Is the new amendment giving an option to assessee (who satisfy the conditions) to refrain from filing tax audit report? A] If person carrying on business, his total total sales, turnover, gross receipts is Rs. (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. If a person files his return under section 44AD and his turnover is up to Rs. Form No. ​​​​​​​The report of the tax audit conducted by the chartered accountant is to be ​furnished in prescribed form i.e. 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? 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]. However, w.e.f. 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. Tax audit clause 44ab(d) or (e) This query is : Resolved Report Abuse Follow Query Ask a Query. 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. 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 … Disclaimer : I tried to put analysis of the provisions of sec 44 AB and 44 AD of the Income Tax Act, 1961 and its applicability on assesses. How much? 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). 2] Person whose total cash receipts and total cash payments does  exceeds 5 % of such receipts or payments. 2. It just discussion and study purpose. So because of such amendment there some strange situation may arise which CBDT should clarify. 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 . Can you please tell me their slabs or provisions 1. Difficult to Genuine Tax Payers, Discussion on GST Notification No. 5 crores for the tax audit is inserted below clause (a) to section 44AB. 94/2020-Central Tax, Removal of Director Under Companies Act, 2013 with Notice & Resolution formats, GST Moving Towards Inspector Raj……. 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. (The Text which is in bold has been added by Finance act, 2020   w.e.f. Section 44AB has been introduced in the Income-tax Act, 1961, by the Finance Act, 1984. Clause 44AB(b) 3. Thus, where audit is done under other law then 3CA plus 3CD is applicable instead of 3CB plus 3CD. Difficult to Genuine Tax Payers, Discussion on GST Notification No. should make suitable amendments in the Income Tax Act, 1961 whrereever it is necessary. Join our newsletter to stay updated on Taxation and Corporate Law. 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. CLAUSE 8 : Indicate the relevant clause of section 44AB under which the audit has been conducted a. Audit has to be done u/s 44 AD[5] of the Income Tax Act, 1961. In this case , assessee has to get his books of account audited as per provisions of sec 44 AD [1]. If total income exceeds basic exemption limit only then tax audit is applicable. 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. 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. 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,- Limit / Criteria. 50 lakhs in the previous year. Join our newsletter to stay updated on Taxation and Corporate Law. In such situation, there are two more situation may arise –. 2 crores. Clause (c) of section 44AB, inserted by the Finance Act 1997 w.e.f. A person is having commission business, 44AD not applicable to it, turnover is 80 Lakhs, and profit is 3 percent, Is audit applicable?? 1cr. 3CB. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. 1] His aggregate of all receipts in cash during the previous year does not exceeds 5 % of such receipts. If profit is at least 50% of gross receipts of profession, then one can go for sec 44ADA nd avoid tax audit. Kindly confirm. The above article is based on the authors private view. Even the Old Regime and NEW Regime too. d) Tax audit is in purview of 44AD. 25 lakh during the relevant year. According to third proviso to section 44AB, if a person is required by or under any other law to get his accounts audited, then he need not get his accounts audited again to comply with the requirement of section 44AB. New Rule 6G, inserted in the Income-tax Rules, prescribes the Forms of Audit report for the above purpose. I had the same thought regarding this. Is he liable for audit, sir. Though meticulous care has been taken but the author assumes no liability in respect of any loss/damage incurred while acting on the basis of information provided. The five clauses of section 44AB under which tax audit can be carried out are – a. 3CA/3CB and ​3CD. Advertisement. Sir, What is meant by cash payments has to be less than 5% or total payments? Section 44AB of the Income Tax Act contains provisions pertaining to the tax audit under the Income Tax Audit. b) In case of profession, if gross receipt exceeds Rs. However, GST Audit may be applicable if registered under GST (GST Audit threshold limit being Rs 2 crore). 3CD.] Kindly help at the earliest. 3CA - Audit report under section 44AB of the Income-tax Act, 1961, in a case where the accounts of the … (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. 50 Lakhs. 1 crores but does not exceeds 2 crore ]. 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. This section applies in a case wherein section 44AD(4) applies. 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. 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. Further some professionals are of an opinion that no audit is required in such a case. Plz read the bare act again. 3CD. 3CD) on or before the ‘specified date’. 3CB and the prescribed particulars are to be reported in Form No. So unfair in both amended for low taxable income people compared to middle and high taxable income. Clause 44AB(a) 2. In other words, more than 95% of the business transactions should be done through banking channels in order to avoid tax audit. 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] . 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. The amended provision of section 44AB is effective for financial year 2020-21 relevant to the assessment year 2021-22. 3CA or 3CB) and such further prescribed particulars (in Form No. 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 assessee can opt for presumptive taxation u/s 44ADA. 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. 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? Audit will not be applicable since the assessee can go for presumptive taxation scheme u/s 44AD. 44AB. 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