Re: Looking for CA for audit and tax preparation related to stocks trading - Bangalor
thanks. I did not know that there were two types of audit 44 AB and AD!
can you please explain the difference.
See actually section 44AD is a misnomer. All the audits are carried out under section 44AB only.
Clause (a) and (b) deals with audits wherein turnover exceeds Rs 1 cr (for businesses) and Rs 25 lakhs (for professions). In such audits, the income is not relevant. Audit is carried out on the basis of turnover itself.
In clause (d) audit carried out for businesses where turnover is below Rs 1 cr and profit from business is below 8% and total income is in excess of maximum exempted limit.
I am leaving out clause (c) as it is beyond the scope of our discussion here.
There are two major differences that arise on account of audit under these different clauses.
1.
The impact on Chartered Accountant: A chartered accountant is governed by his professional ethics. Now ICAI has restricted a CA to perform not more than 60 tax audits in a year under clause (a) and (b) combined. However, there is no limit on number of tax audits one can sign under clause (d).
Though the above restriction is applicable to the CA, the impact of the same is borne by you. In case your turnover crosses Rs 1 cr, the CA will charge you higher audit fees as he can do only a limited number of clause (a)/(b) audits.
2. Impact on the assessee: The impact here is a major one and the import of the same is yet to be captured by stock trading community.
If you are covered under clause (a)/(b), then you are also required to comply with TDS regulations while making business payments. What it means is that if your turnover crosses Rs 1 cr, then you need to apply for Tax Account Number, and while making payments to brokers (brokerage) etc you need to deduct TDS, and deposit the same with Income-tax department within due dates and file TDS returns. However, if you are covered under clause (d), TDS regulations are not applicable on you.