TAX AUDIT UNDER SECTION 44AB, 44AA, 44AD, 44AE, 44ADA: All You Need To Know

Maybe you are a you-tuber or blogger earn money from you-tube or blog or you have any kind of business or professions like supply of goods or service or treading or you may distributor or agent of some service or product, or you have some profession of education or low or insurance agent or doctor for everyone this is very important post that to know that your income is auditable before tax filling or not. That will you required o get Tax Audit and Maintain up-to-date books of account or not.

So friends, if you are engaged in any kind of business or profession, read this post carefully because tax audit is and the role it plays in determining your tax liability.

What is TAX AUDIT:

A tax audit is a formal examination conducted by the Income Tax Department to verify information or uncover fraud and inaccurate tax returns. The Income Tax Department selects tax returns to examine both randomly. If the audit is selected randomly, the Income Tax Department will simply take a closer look to make sure all information is accurate. The Income Tax Department will audit certain tax returns if there are issues, errors, or possible frauds in reporting the tax return.

Now If You are Liable for audit before submitting your income tax return as per the requirements of the section under which you qualify, you will have to abide by certain protocols, maintain accounts, and have them reviewed by a CA. 

Now we are discussing who or which profession or Business person liable for Tax Audit? 

As per Income Tax Act if Your business Gross turn over is More then 1cr or as a Professional if Your gross receipt Exceeds 50laks Then You have to do Tax Audit by Chartered Accountant(CA) and submit tax file Under Section 44AB or and maintain Books of  Account Under Section 44AA.

So Friends in this post we will discuss about Section 44AB and 44AB. But for the Low turn over business or Profession they dose not required to submit Audit in the time of ITR submission they will submit there return under section 44AD, 44ADA or 44AE.

Description of Section 44AB-

Under Section 44AB of Income Tax Act, Tax Audit is mandatory -

TAX AUDIT UNDER SECTION 44AB

You have to file ITR U/S 44AB if the following condition is applied on You,-

- Your business gross turnover exceeds Rs.1 crore in any preceding year or if your profession’s gross receipts are more than Rs.50 lakh in any preceding year.

- Your business or profession is covered Presumptive Income Under Sections 44AD, 44AE, 44ADA, and your profit are less than the specified limit i.e. 8% for Non Banking and 6% for Banking Transaction.

- If you have more than one business or profession, the turnover for all needs to be summed up to determine if an audit is necessary.

The tax audit date for this section is 30th September of the assessment year. In order to file the audit report, you will have to make use of form 3CA and form 3CD, which is a statement acknowledging the particulars you have stated in form 3CA.

Description of Section 44AA-

In this section 44AA of Income Tax Act they will describe when who or what kind of Business or Profession required to maintain Books of Account. You have to maintain Books of Account if following conditions apply on you-

Maintenance of Books of Account

- In case you are a professional practicing in a field such as medicine, law, engineering, architecture, accountancy, technical consultancy, interior decoration or film industry-specific work and your gross income is less than Rs.1,50,000 in all 3 years preceding the most recent year, then you need to maintain prescribed books such as a cash book, journal, ledger, daily case registers, and stock register.

- If you do not have a specified profession and your receipts of gross income exceed Rs.10,00,000 in any of the 3 years preceding the most recent year, then you will have to maintain books of accounts. These books need to be the ones that enable the assessing officer to compute your total income.

- If you are covered under Section 44ADA/44AF/44BB/44BBB and your income is lesser than the specified limit, then maintaining books to support your claim is optional. 

Description of Section 44AD, 44AE, 44ADA (Presumptive Income)-

For Small Business Less Then Turnover 50 lakhs and Small Vehicle owners Govt. is offered Presumptive Taxation Under Section 44AD, 44AE, 44 ADA to reduce the burden of Tax Audit and burden of maintaining Books of Account. We will discuss these 3 Sections briefly in our Next Post.

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