Fire your tax related queries and i would get it solved!!!

[canikhil]

Sec 44-AB or AD whatever, it states that Tax audit is not required if Turnover is less than 1 crore ( upto FY 2016-17 )
and less than 2 crores now. The same section states that tax audit is required if turnover is less than 2 crores,but
total income ( salary, other incomes etc ) exceeds min tax exemption limit of 2.5 lakhs. What if turnover in
share market exceeds Rs 2 crores, profit less than 6%, but all incomes put together is less than Rs 2.5 lakhs?

always read the whole section and not part of it. Once you are out of 44AD (ie the turnover exceeds Rs 2 cr, you are required to do the audit regardless of profit or loss as well as the level of Income

 

[kcsusha]

Dear Canikhil Sir,
I think my above query is not answered fully.
Suppose my turnover ( which means all gains and losses in equity trading, intraday trading,futures, in respect of
delivery-based trading it is gains plus sale value of stock, gains and losses in options trades plus premium received
on sale of options ) is less than Rs 2 crores and profit less than 6%,
Tax audit is required or not in respect of
(1) Total income including salary, speculative income, capital gains, business income etc exceeds Rs 2.5 lakhs
(2) Total income as above is less than Rs 2.5 crores.

 

[kcsusha]

Sorry item No 2 should be Rs 2.5 lakhs instead of Rs 2.5 crores.

 

[kcsusha]

What I mean to say is that if my income from say only share business ( let us assume I have no other job )
exceeds Rs 2.5 lakhs but my total turnover is less than Rs 1 crore ( and not Rs 2 crore which is applicable
under sec 44AD presumption tax ) will I require tax audit?

 

[Probability]

Any CA who can do audit for less than 10K? regardless of turnover and trades?

 

[john302928]

s


I might not use your data for explaining the problem but the text below should help you:

1. Lets say the turnover is below 2 cr, there is no salary income and there is a loss and you want to carry it forward.

Now what you do here - 1. Audit is not applicable as as the income is below exempted limit but how do you claim the loss? (this problem arises on account of bad drafting of law.

In this case, if the turnover is below 1 cr, you don't face much problem. You file ITR-3, say yes to whether you need to maintain accounts, say no to audit and claim and carry forward the losses.

But what happens when the turnover is above 1 cr, then the above option doesn't work as 44AB audit limit is Rs 1 cr. So in these cases, on account of bad drafting of law, you would be required to get the audit done if you want to carry forward the losses.

2. What if you don't want to carry forward the losses at all.

If the turnover is below 1 cr, then not filing the return could be a solution. In case you receive a notice, you just state that since the income is below exempted limit, you didn't file the return.

But what happens when the turnover is above 1 cr, then situation is not as clear.

While filing the return is still not mandatory, but the department may claim that filing the audit report was mandatory since you didn't claim 44AD and your turnover is above 44AB audit limit.

I hope the above helps.

Hi One quick question,
Say in the FY 17-18 we come under non audit scenario and in the previ FY16-17 we used sec 44AD, can we still goahead and proceed with non audit case this year since this year scenario is non audit case. (I understand if we come out of 44AD we cant use it for next 5 years ) What I am curious to know is that since we used 44AD last year and this year we fall under non audit case, do we need to go for audit just because we used 44AD last year or we can still goahead and proceed as if we are non audit case. Please reply quickly . Thanks in advance

 

[kcsusha]

canikhil Sir,
If we specifically say that we are not carrying forward losses, turnover is below Rs 1 crore and income from
share business is below taxable limit, then tax audit is not necessary? What if income including share
business exceeds taxable limit, but turnover is less than Rs 1 crore and we are not carrying forward losses,
tax audit is required or not?

 

[canikhil]

carrying forward of losses has no link with the tax audit. If you are going under the 44AD route, and your total income is above the taxable limit and your profit is below the 6%/8% (as the case may be) of the turnover, the audit will apply.

 

[Probability]

carrying forward of losses has no link with the tax audit. If you are going under the 44AD route, and your total income is above the taxable limit and your profit is below the 6%/8% (as the case may be) of the turnover, the audit will apply.

What if total income is below taxable limit? then is Audit necessary ?

 

[Rishi_1]

What if total income is below taxable limit? then is Audit necessary ?

If your turnover is above 2 Crore then yes.