Tax Audit Under Section 44AB
11 June 2015
Who is liable to get their books of accounts audited u/s 44AB of the Income Tax Act 1961?
Following persons are required to get their books of accounts compulsory audited by a chartered account.
| A person carrying on business
|| If the total sales, turnover or gross receipt in business for the previous year relevant to the assessment year exceeds Rs.1 crore.
| A person carrying on profession
|| If is gross receipt in profession for the previous year relevant to the assessment year exceeds Rs.25 lakh.
| A person covered under section 44AE 44BBor 44BBB
|| If such person claims that the profits and gain from the business are lower than the profits and computed under these sections (irrespective of his turnover).
| A person covered under section 44AD
|| If such person claims that profits and gain from the business are lower the profits and computed in accordance with the provisions 44AD (1) and if his income exceeds the maximum amount which is not chargeable to tax.
Due date for obtaining audit report- Audit report should be obtained on or before the due date of submission of return of income under section 139(1)*.The audit report should be submitted electronically on or before the due date of submission of return on income i.e. 30th of September of the relevant assessment year.
The section goes on to define the term profession by including professions such as medical, engineering, architectural, accountancy, technical consultancy, interior decoration or any other notified profession.
Taxpayers carrying on their business in trading derivatives need to know that the method of calculating the turnover in their case is different. Here the turnover is not the sale proceeds or the gross receipts. The turnover in these cases is calculated by totaling the profits or losses made in each transaction. Let's take an example where a trader has made a profit of Rs. 100 in one transaction and a loss of Rs. 200 in another. Therefore his turnover for section 44 AB would be Rs. 300.