44AB. However, w.e.f. 17 [Audit of accounts of certain persons carrying on business or profession.. 18 44AB. Penalty for not getting accounts audited under Section 44AB. person referred to in clause (b) of sub-rule (1) of rule 6G 3CD Statement of particulars required to be furnished under section 44AB of the Income-tax Act, 1961 BACKGROUND The tax audit was introduced by section 11 of the Finance Act, 1984, which inserted a new section 44AB with effect from 1st April, 1985 [Assessment Year 1985-86]. c) Tax audit is in purview of 44AE, 44BB & 44BBB . 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. So it is expected that CBDT should come out with suitable clairification or Govt. However GST Audit will be applicable if registered under GST (GST Audit threshold limit being Rs 2 crore). 2. Can such asseesse file tax audit report if they want? 2021-22…Please refer Bare Act and reply please after checking. 44AB(e) is for business. The new proviso to section 44AB providing the enhanced turnover limit of 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. FORM NO. Join our newsletter to stay updated on Taxation and Corporate Law. 1 crore to Rs. 3CA - Audit report under section 44AB of the Income-tax Act, 1961, in a case where the accounts of the … Nice , feeling like you r talking diectly…, Your email address will not be published. It just discussion and study purpose. 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 . The Section 44AB of the Income Tax Act enjoins provisions regarding tax audit under IT Audit. Recently, we have discussed in detail section 44AA (maintenance of accounts by certain persons carrying on profession or business) of IT Act 1961. Does it mean that if the turnover exceeds Rs. Clause (a) of Section 44AB talks about a person carrying on business whereas clause (b) talks about a person carrying on a profession. but New Regime is better for net taxable income above 15Lacs. 3CD) on or before the ‘specified date’. 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. 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. Because Section 44AB reads as under: "Audit of accounts of certain persons carrying on business or profession”. So this rule change is NOT applicable for AY 20-21? 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]. Etc. 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] . 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. In this case , assessee has to get his books of account audited as per provisions of sec 44 AD [1]. Difficult to Genuine Tax Payers, Discussion on GST Notification No. 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). Clause (c) of section 44AB, inserted by the Finance Act 1997 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. Section 44AB of the Income Tax Act contains provisions pertaining to the tax audit under the Income Tax Audit. 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. Section 44AB of Income Tax Act. So unfair in both amended for low taxable income people compared to middle and high taxable income. 3CD. Clause. 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. Join our newsletter to stay updated on Taxation and Corporate Law. In such situation, there are two more situation may arise –. Audit of accounts of certain persons carrying on business or profession.44AB. Tax Audit l Section 44AB of Income Tax Act,1961 l New Tax Audit l Tax audit limit I GST Sathi - Duration: 8:43. If a person files his return under section 44AD and his turnover is up to Rs. B] ] If person carrying on business, his total total sales, turnover, gross receipts is Rs. For this purpose, section 44AB of the Income Tax Act, 1961 is amended vide clause 23 of the Finance Bill, 2020. Meaning of Certain Terms used in section 194J . 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. 50 lakhs in the previous year. 5 crores in cases where the aggregate cash receipts AND aggregate cash payments made during the year does not exceed 5% of total receipt and total payment respectively. 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. Section 44AB. 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 other words, more than 95% of the business transactions should be done through banking channels in order to avoid tax audit. I had the same thought regarding this. 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. A) For Resident Individual /HUF/Firm (excl LLP) ( i.e. [ that above Rs. 12(a) and (b) of Form 3CD Para No. In your chart of tax audit — pt no 4 & 5 – if turnover is > than 1 crore & < 2 crore and < 1 crore. This is the perfect analysis of the 2 sections. 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. (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 total income exceeds basic exemption limit only then tax audit is applicable. Clause 44AB(c)-ii 5. All Rights Reserved. Clause 44AB(a) 2. 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. 3CA or 3CB) and such further prescribed particulars (in Form No. —For the purposes of this section, —. If the turnover exceeds INR 1 Cr (INR 5 Cr from AY 20-21), tax audit is applicable as per Section 44AB(a). As per the new proviso, the tax audit turnover limit would be INR 5 Crores in case the following two conditions are satisfied: 2] His aggregate of all payments in cash during the previous year does not exceeds 5 % of such payments. This was accompanied by a amendment in Explanation to Sec 44AB. New Rule 6G, inserted in the Income-tax Rules, prescribes the Forms of Audit report for the above purpose. Section 44AB of the Income Tax Act, 1961 includes the provisions for the tax audit. If total income exceeds basic exemption limit only then tax audit is applicable, 3. 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? 3CB [See rule 6G(1)(b)] 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 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"? 1 crores but does not exceeds 2 crore ]. Salil. Further some professionals are of an opinion that no audit is required in such a case. (2) The particulars which are required to be furnished under section 44AB shall be in Form No. In order to submit a comment to this post, please write this code along with your comment: ade3c276b2177f4da990677856cad2a3. 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,- person is eligible assessee, is below 8 % of 6 % [ if his gross total turnover or receipts recd in banking mode] For any queries or suggestions, the author can be reached at tanweer.rk@gmail.com. “, ‘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]. Assessment Year 2020-21, the threshold limit for tax audit u/s 44AB(a), for a person carrying on business, is increased from Rs. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. 1. 17 [Audit of accounts of certain persons carrying on business or profession.. 18 44AB. 44AB(e) may not applicable unless the assessee had earlier opted for 44AD and then comes out of it. Section 44AB of the Income Tax Act contains provisions pertaining to the tax audit under the Income Tax Audit. 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. 1] His aggregate of all receipts in cash during the previous year does not exceeds 5 % of such receipts. The assessee can opt for presumptive taxation u/s 44ADA. It is strange and injustice to small assessee. 50 lakh in case of the profession, as the case may be. Thanks. GST SATHI 41,833 views. 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? Satisfy condition stated in Sec 44 AD [ 1 ] provisions applicable to eligible means..., Removal of Director under Companies Act, 2020 in respect of tax audit is required such... This Query is: Resolved report Abuse Follow Query Ask a Query come out suitable! 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