Sec 44ab of income tax act 1961 for ay 2017-18

Tax audit under section 44ab of income tax act,1961 slideshare. The tax audit is conducted in sec 44ab of the income tax act by a chartered accountant. So let us discuss the applicability of this section for the purpose. Maintenance of accounts by certain persons carrying on profession or business 44aa1 every person carrying on the legal, medical, engineering,accountancy, technical consultancy, architectural, interior decoration or any otherprofession asnotified by central board ofdirect taxes cbdt. It means an assessee need to be audited under sec 44ab if his annual gross receipts in profession exceeds rs. The due date for tax audit report and income tax return filing for assessee being company, firm and other required to get accounts audited under income tax act or other law and working partner of such firm for the fy 201617ay 201718 has been extended by the cbdt to 7th november 2017. Section 44aa prescribes the persons who are mandatorily required to maintain books of accounts for income tax purposes.

In this case,is tax audit applicable for ay 201819 and if yes can you. This section provides for audit of accounts of assessees having total sales, turnover or gross receipts exceeding the specified limits of rs. Transporters income assumed to be 7500 monthvehicle under section 44ae. Tax audit sec 44ab limit for businesses is 1 crore or 2 crore in fy. Due date for obtaining audit report is on or before 30th september of the appropriate financial year.

This was done to ease the compliance burden on the small businesses. Major changes in income tax for fy 201718 ay 201819. Tax audit is conducted in sec 44ab of the income tax act,1961 by a chartered accountant. Further, it will be assumed that disallowance, if any, usec. In order to promote digital payments and encourage small businesses to start using digital payments, a special provision is incorporated in. Measures for promoting affordable housing and real estate sector d. The limits of the above said provisions have been increased to 150000 or. What is the tax audit limit for the assessment year 201718. Section page contents division one 111 incometax act, 1961 page u arrangement of sections i3 u text of the incometax act, 1961 as amended by the finance act, 2011 1. Because now the criteria for tax audit under section 44ad is given under sub section 5 i,e an assesee should have availed 44ad in the ay 201718 and subsequent five years. Earlier it was extended to 31 st october 2017 from 30 th september 2017. For the purpose of determining the income chargeable under the head profits and gains of business or profession.

Any person who is covered by the section 44ab has to get his accounts audited and obtain the audit report before the due date. Section 44ab of the income tax act contains provisions pertaining to the tax audit under the income tax audit. Section 44ad of income tax act for fy 20192020, ay 20202021. Tax audit report for the financial year 201415 has to be obtained on or before 30th of sept 2015. Books of accounts are required to be maintained for 6 years from the end of relevant assessment year. 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. To give relief to small taxpayers from the tedious job of maintenance of books of account and from getting the accounts audited, the incometax act has framed the presumptive taxation scheme under sections 44ad, section 44ada and section 44ae. Section 44ab of the incometax act, 1961 contains the provisions for the tax audit of an entity. New income tax rate financial year fy 201819 or assessment yearay 201920. As per section 44aa, any person carrying on any of the following professions is required to maintain books of accounts. Any other profession that may be notified by cbdt in future. Tax audit under section 44ab has been changed for fy 201415.

Section 234f fee penalty for delay in filing incometax. Section 44ad of the income tax act, 1961 section 44ad, a scheme launched for the benefit of small businesses, wherein the assesses which are eligible for the scheme do not have to maintain books of accounts and file returns on a presumptive basis. Section 44ab of the incometax act the act makes it obligatory for every person carrying on business to get his accounts of any previous year. Chapter iv sections 1459 of income tax act, 1961 deals with provisions related to computation of total income. As per these provisions, tax audit shall be conducted by a practicing chartered accountant who ensures that the taxpayers has maintained proper books of account and complied with the provisions of the incometax act. There are cetain forms required when it comes to auditing the accounts of a taxpayer us 44ab. The audit under section 44ab aims to ascertain the compliance of various provisions of the incometax law and the fulfillment of other requirements of the incometax law.

A tax audit is an audit, made compulsory by the income tax act, if the annual gross turnoverreceipts of the assesse exceed the specified limit. Y 201718, an assessee who opts from this scheme is required. Maintenance of accounts by certain persons carrying on business or profession. Presumptive taxation scheme section 44ad, 44ada and 44ae of it act. The income from the business of profession exceeds rs 120000 or the turnover gross receipts exceed 000 in any of previous 3 years till the financial year 201617. According to section 44ab of the income tax act 1961 updated upto 2019 the. Presuming that an assessee for the ay 201718, has an annual turnover of.

Is it deemed that the limit us 44ab has also been increased because every person individual, huf, firm with income below 2cr will go for presumptive taxation and declare profit above 8% to avoid tax audit. Income tax audit under section 44ab criteria, audit. Meaning of turnover or sales for section 44ab tax audit. As we all know that the finance act 2017 which is applicable from the previous year 201718. As per finance act, sec 44ab has been amended only to the extent of increasing limit for profession to 50lakhs. As we all know that the finance act 2017 which is applicable from the previous year 201718 has made an amendment in section 44ab tax audit by inserting a new proviso which has made the applicability of this section completely different. The examination is conducted to ensure that the taxpayer has properly maintained the books of accounts and other records. Article discusses applicability of tax audit under section 44ab in in a case. Tax audit sec 44ab limit for business and profession. The threshold limit of rs 1 crore for a tax audit is proposed to be increased to rs 5 crore with effect from ay 202122 fy 202021 if the. According to this section, there will be a penalty of. Tax audit sec 44ab limit for businesses is 1 crore or 2. Simply tax audit means, an audit of matters related to tax. Step by step guide to tax audit tax audit us 44ab ay.

In case of specified profession 2 if gross receipts exceed rs. Even before the finance act 2016 was introduced, presumptive taxation scheme existed under sections 44ad and 44ae of the income tax act, 1961 to give relief to small tax payers from the maintenance of books of accounts and audit of acc. Agricultural income is defined under section 21a of the incometax act. New income tax rate financial year fy 201819 or assessment yearay 201920 presumptive taxation scheme section 44ad, 44ada and 44ae. But if he fails to declare his income us 44ad in any of the next 5. Quick insight on sec 44aa, 44ab, 44ad presumptive taxation. Requiremnts of forms to be submitted under section 44ab. Income tax audit under section 44ab criteria, audit report, penalty. Tax audit l section 44ab of income tax act,1961 l new tax. Agriculture income section 101 as per section 101, agricultural income earned by the taxpayer in india is exempt from tax. Section 44aa of income tax act 1961 section 44aa of.

Section 44aa persons required to maintain books of. The threshold limit of rs 1 crore for a tax audit is proposed to be increased to rs 5 crore with effect from ay 202122 fy. Section 44af of income tax act 19612017 provides for special provisions for computing profits and gains of retail business. It will be noted that the provision relating to tax audit applies to every person carrying on business, if his total sales, turnover or gross receipts in business exceed rs. Section 44ad of the income tax act 1961 go for filing. A tax audit is an audit, made compulsory by the income tax act if the annual gross turnoverreceipts of the assessee exceed the specified limit. Income tax audit under section 44ab criteria, audit report. All air prevention and control of pollution act, 1981 apprentices act, 1961 arbitration and conciliation act, 1996 banking cash transaction tax black money undisclosed foreign income and assets and imposition of tax act, 2015 central boards of revenue act, 1963 charitable and religious trusts act, 1920 charitable endowments act, 1890. Section 44aa persons required to maintain books of accounts, specified profession under section 44aa, section 44aa1 of income tax act, section 44aa of income tax act 1961 for ay 201718, 44aa applicability, section 44aa of income tax act 1961 for ay 201617, section 44aa for ay 201819, section 44aa of income tax act 1961 for ay 201819. A tax audit is an examination of a taxpayers books of accounts. Due date the due date of filing the tax audit report under sec 44ab is 30th sep of the assessment year. And also, he is required to get the books audited as per the provisions of section 44ab of the income tax act, 1961. Hence, an individual is not eligible for claim deduction under section 38 or 30 of the income tax act. Earlier penalty for delay in filing of return was levied at the discretion of assessing officer.

In case of audit us 44ab the due date is 30th september. Hence, where the gross receiptstotal turnover from the business exceeds rs. Is presumptive taxation applicable for fy 201516 ay 2016. Tax audit under section 44ad with effect from the ay 2017. Assessee cannot get deduction us 10a, 10aa, 10b, 10ba or. Read this article to know more about section 44ab of the income tax act, 1961.

As per the provisions of income tax act, the benefit of section 44ad shall not be applicable where the gross receipts from business exceeds rs. Section 44aa persons required to maintain books of accounts. For example tax audit of the financial year, 201718 ay 201819 should be filled on or before 30 th september 2018. Section 234f has been inserted in income tax act, 1961 for levy of compulsory feepenalty on the filing of return after the due date. One can find special mention of those forms in rule 6g of the income tax act, 1961. Maintenance of accounts by certain persons carrying on business or profession prescribed books1. As per these provisions, tax audit shall be conducted by a chartered accountant who ensures that the taxpayers has maintained proper books of account and complied with the provisions of the incometax act.

Tax audit limit for ay 201819 fy 201718 is as under. Tax audit under section 44ab refers to the independent verification of the books of accounts of the assessee to form an opinion on the matters related to taxation compliances carried out by the assessee. Here you can know about section 44aa of income tax act 1961. Tax audit under section 44ab of income tax act 1961 in hindi. If the assessee shows income as per section 44ad in one assessment year and opted not to follow the benefits of section 44ad then the assessee has to maintain the books of account as mentioned us 44aa and is required to get his accounts audited us. Section 28 of income tax act 19612017 provides special provision for profits and gains of business or profession. Y 201617, is exempted from payment of advance tax related to such business. If 44ada applicable to assessee then the provisions of section 44ab d requires such an assessee to get his accounts audited if he has claimed his income to be lower than the profits or gains so deemed a sum equal to 50% of the total gross receipt is deemed as income to be the profits and gains of his business and his total income exceeds the maximum amount not chargeable to tax. The provisions of finance bill, 2017 relating to direct taxes seek to amend the incometax act, 1961 the act and the finance act, 2016 a.

Tax audit report us 44ab of income tax act, 1961 1. Section 44ab has been introduced in the incometax act, 1961, by the finance act, 1984. Section 145a of the income tax act, 1961 states that purchase, sale and inventory shall be valued by taking into account the amount of any tax, duty, cess or fee. In case of specified profession if gross receipts are less than 150000. Yet tax audits for the ay 201617 are on their way and to finish before 30. So if assessee is declaring lower income than 8% and his total income exceeds the maximum amount which is not chargeable to incometax, he is required to get his accounts audited by ca us 44ab.

In case, the actual income is more than the presumptive income scheme, this provision allows the assessee to declare the higher income at his option higher than the prescribed rate of 8%. Under this section, fee penalty is levied if the incometax return is not filed within due date. Section 44ab of income tax act tax audit applicability. Text of remaining provisions of allied acts referred to in incometax act 1. In fy 201718 ay 201819, due dates for filing itr remains same, i.