INCOME TAX LIMIT APPLICABLE FOR INCOME TAX AUDIT (U/S 44AB) IN INDIA

LIMIT APPLICABLE FOR INCOME TAX AUDIT (U/S 44AB) IN INDIA

Objective if tax audit:-

 Objectives of tax audit is to report the requirements of Form Nos. 3CA/3CB and 3CD. Other than the reporting requirements of Form Nos. 3CA/3CB and 3CD a proper tax audit for will ensure that the books of account and other records are properly maintained, so that they truly show the income of the taxpayer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of accounts before the tax authorities and considerably save the time of Assessing Officers in carrying out routine verification’s. The time of the Assessing Officers saved could be utilized for attending more important investigation of any case.​

As per section 44AB under income tax act, 1961:-

  • Every person who is doing business and his turnover exceeds one crore rupees.
  • Every person who carrying any profession and his gross receipt is exceeds twenty five lakh rupees.
  • If the person is carrying on business and claims lower profit than the profits and gains earned in business under section 44AD.

Due date of filing tax audit report under section 44AB is 30th September of each assessment year.

As per Sub Section (5) of section 44AD under income tax, 1961:-

As per provisions of Section 44AD person who satisfy all of the following conditions is required to get his books of accounts audited under Section 44AB:-

  1. Following persons includes:
  • An individual
  • Hindu undivided family
  • A partnership firm who is resident of india and not a limited liability partnership firm.
  1. Following business includes:
  • Any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE.
  • Whose total turnover or gross receipts in the previous year does not exceed an amount of one crore rupees.
  1. The profits of an assessee who is doing eligible business under the head ‘Profits and gains from business and profession’ less than 8% of the total turnover of the assessee.
  2. Total Income of person is also more than the maximum amount which is not chargeable to tax.

Persons like company or co-operative society are required to get their accounts audited under their respective law. S​ection 44AB provides that, if a person is required by or under any other law to get his accounts audited, then he need not again get his accounts audited to comply with the requirement of section 44AB.

FORM NO.3CA/3CB & 3CD:

The report of the tax audit conducted by the chartered accountant is to be furnished in the prescribed form. The form prescribed for audit report in respect of audit conducted under section 44AB ​is Form No. 3CB and the prescribed particulars are to be reported in Form No. 3CD. Persons are required to get their accounts audited by or under any other law, the form prescribed for audit report is Form No. 3CA/3CB and the prescribed particulars are to be reported in Form No. 3CD.​

PENALTY FOR NON- COMPLIANCE OF 44AB:

As per section 271B if any person who is required to comply with section 44AB fails to get his accounts audited as required under section 44AB may liable for lower of following penalty:

(a) 0.5% of the total sales or gross receipts, as the case may be, in business, or in profession, in such year or years.

(b) Rs. 1,50,000

If reasonable cause is shown then no penalty is imposed according to the section 273B.

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associates , a leading Tax & Investment Planning Advisory Service Provider. His blog can be found at http://carajput.com/blog/For any query you can write to info@carajput.com. Hope the information will assist you in your Professional endeavors. For query or help, contact:   info@carajput.com or call at 09811322785/4 9555 5555 480)

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