Are You Covered Under Tax Audit
- Thread starter canikhil
- Start date
- Tags 44ab 44ad ay 2015-16 tax audit
You are a CA, just do the math, on a sum of 2-3 lacs you make profit around 30-50k, you dont have to file return as your total income is under tax free(assuming no other source of income. upto two lacs of profit eveyone can ignore tax, but its a ground reality that nobody makes 2 lacs on the sum of 2-3 lacs invested in a financial year, assuming he continues trading throughout the year. Now again taking forward the same case If one makes a loss of 20,000 or say 1,00,000, he needs to pay another fees of 15,000 to claim the loss of 20k or even say 100000. Now next year you have to make profit of 200000 or more to claim previous year rebate, and again shell 15000, so ca costs add up to 30000. if you reiterate same process of taking profit and loss carrying forward for 5 years, he ends up paying more to auditing costs then claiming for loss. So bottom line is that for a trader who is trading for living on a capital of 2-3 lacs per annum, cost of auditing and filing an ITR is not viable, he's already burdened with stt, ctt and other taxes plus market losses, so its better if IT guys leave these poor creatures alone. coz its a fact they never going to make it with huge taxes.
Dear friend,
if there is no other income like salary and there are losses, then there is no need to hire a CA. Just file the return on your own as tax audit is not applicable! I personally have advised a lot of guys to do their own taxes in case the audit is not applicable. So in your hypothetical case consider the rules for audit too before closing on an opinion. In any case, income-tax authorities are closing on traders and issuing notice based on AIR. So either way filing return is advisable. And with laws, you first look at compliance instead of cost-benefit analysis..
if there is no other income like salary and there are losses, then there is no need to hire a CA. Just file the return on your own as tax audit is not applicable! I personally have advised a lot of guys to do their own taxes in case the audit is not applicable. So in your hypothetical case consider the rules for audit too before closing on an opinion. In any case, income-tax authorities are closing on traders and issuing notice based on AIR. So either way filing return is advisable. And with laws, you first look at compliance instead of cost-benefit analysis..
I failed to add that turnover is usually above 1 cr, its very likely that most of traders cross 1 cr limit in a financial year.
My case was hypothetical but implications were practical. Bottom line trader who is trading on a capital of 2-3 lacs will naturally end up making turnover of 1 cr, its a fact. and second assumption is, in most of the cases many traders will be in a loss in a financial year, and I'm sure majority will come under both category.
So I was making a case for the majority of the community, ofcourse Audit will be required as turnover exceed, If profit, then ok, but loss there is no getaway for audit and this is where traders are left with two choices to file a return or not. I havent said a thing about compliance, but onus is left on trader to file the audited return or not, but consider the fact that on a working capital of 2-3 lacs where one is in loss you are burdening him with another 15k. If I have a loss of 20k which is very legitimate and I want to carry it forward to next year, I have to pay a CA a fees of 15k at least, which amount's to 75% of my loss. Instead I'll better forget this years loss, and start new year afresh. coz its no where written that I have to book loss and add to my sufferings by paying another 75% of my loss to my CA. Its atleast some relief that its not mandatory to show my losses too for the eyes of IT department.
And about AIR that you said, is applicable only for big fishes who have deposits of 10lacs and above in other bank accounts, and we are here talking about small traders who are trading on capital of 2-3 lacs which is again may or may not be borrowed so where comes the question of AIR.
So for legitimate traders they are off limits given they are under above criteria and it doesnt makes any sense to dig any further as they are very small fish in the ocean. I guess you cant deny that. If you still have any point to make now, I'm listening.
My case was hypothetical but implications were practical. Bottom line trader who is trading on a capital of 2-3 lacs will naturally end up making turnover of 1 cr, its a fact. and second assumption is, in most of the cases many traders will be in a loss in a financial year, and I'm sure majority will come under both category.
So I was making a case for the majority of the community, ofcourse Audit will be required as turnover exceed, If profit, then ok, but loss there is no getaway for audit and this is where traders are left with two choices to file a return or not. I havent said a thing about compliance, but onus is left on trader to file the audited return or not, but consider the fact that on a working capital of 2-3 lacs where one is in loss you are burdening him with another 15k. If I have a loss of 20k which is very legitimate and I want to carry it forward to next year, I have to pay a CA a fees of 15k at least, which amount's to 75% of my loss. Instead I'll better forget this years loss, and start new year afresh. coz its no where written that I have to book loss and add to my sufferings by paying another 75% of my loss to my CA. Its atleast some relief that its not mandatory to show my losses too for the eyes of IT department.
And about AIR that you said, is applicable only for big fishes who have deposits of 10lacs and above in other bank accounts, and we are here talking about small traders who are trading on capital of 2-3 lacs which is again may or may not be borrowed so where comes the question of AIR.
So for legitimate traders they are off limits given they are under above criteria and it doesnt makes any sense to dig any further as they are very small fish in the ocean. I guess you cant deny that. If you still have any point to make now, I'm listening.
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