There are total 5 clauses under which one might be required to get their books of accounts audited. It may happen that the assessee may fall under one more than one clause, in such case the taxpayers can select different option in the drop box menu.
The term ‘turnover’ for the purposes u/s. 44AB would mean the aggregate amount for which sales are affected or services rendered by an enterprise. The following should not be deducted from sales to arrive at turnover:
The dictionary meaning of the term "audit" is check, review, inspection, etc. There are various types of audits prescribed under different laws like company law requires a company audit; cost accounting law requires a cost audit, etc. The Income-tax Law requires the taxpayer to get the audit of the accounts of his business/ profession from the view point of Income-tax Law.Section 44AB gives the provisions relating to the class of taxpayers who are required to get their accounts audited from a chartered accountant. The audit under section 44AB aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfillment of other requirements of the Income-tax Law. The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44AB is called tax audit.The chartered accountant conducting the tax audit is required to give his findings, observation, etc., in the form of audit report. The report of tax audit is to be given by the chartered accountant in Form Nos. 3CA/3CB and 3CD.
One of the objectives of tax audit is to ascertain/ derive/ report the requirements of Form Nos. 3CA/ 3CB and 3CD. Apart from reporting requirements of Form Nos. 3CA/ 3CB and 3CD, a proper audit for tax purposes would ensure that the books of account and other records are properly maintained, that they truly reflect the income of the taxpayer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of accounts before the tax authorities and considerably save the time of Assessing Officers in carrying out routine verifications, like checking correctness of totals and verifying whether purchases and sales are properly vouched for or not. The time of the Assessing Officers saved could be utilized for attending to more important and investigational aspects of a case.
As per section 44AB, following persons are compulsorily required to get their accounts audited:
Note: The threshold limit, for a person carrying on business, is increased from 1 Crore to 10 crore in case when cash receipt and payment made during the year does not exceed 5% of total receipt or payment, as the case may be. In other words, more than 95% of the business transactions should be done through banking channels.
Note: Section 44BB is applicable to non-resident taxpayers engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire basis to be used in exploration of mineral oils. Section 44BBB is applicable to foreign companies engaged in the business of civil construction or erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project.
Persons like company or co-operative society are required to get their accounts audited under their respective law. Section 44AB provides that, if a person is required by or under any other law to get his accounts audited, then he need not again get his accounts audited to comply with the requirement of section 44AB. Is such a case, it shall be sufficient if such person gets the accounts of such business or profession audited under such law and obtains the report of the audit as required under such other law and also a report by the chartered accountant in the form prescribed under section 44AB, i.e., Form No. 3CA and Form 3CD.
The report of the tax audit conducted by the chartered accountant is to be furnished in the prescribed form. The form prescribed for audit report in respect of audit conducted under section 44AB is Form No. 3CB and the prescribed particulars are to be reported in Form No. 3CD.In case of persons covered under previous FAQ, i.e., who are required to get their accounts audited by or under any other law, the form prescribed for audit report is Form No. 3CA and the prescribed particulars are to be reported in Form No. 3CD.
A person covered by section 44AB should get his accounts audited and should obtain the audit report on or before 30th September of the relevant assessment year, e.g., Tax audit report for the financial year 2021-22 corresponding to the assessment year 2022-23 should be obtained on or before 30th September, 2022.The tax audit report is to be electronically filed by the chartered accountant to the Income-tax Department. After filing of report by the chartered accountant, the taxpayer has to approve the report from his e-fling account with Income-tax Department.
According to section 271B, if any person who is required to comply with section 44AB fails to get his accounts audited in respect of any year or years as required under section 44AB or furnish such report as required under section 44AB, the Assessing Officer may impose a penalty. The penalty shall be lower of the following amounts:
However, according to section 271B, no penalty shall be imposed if reasonable cause for such failure is proved.
Form ITR – 4 (SUGAM) can be u sed by an Individual/HUF/Firm (Other than LLP) whose total income for the year includes:
Further, in a case where the income of another person like spouse, minor child, etc., is to be clubbed with the income of the taxpayer, this return form can be used where income to be clubbed falls in any of the above categories.
Form ITR – 4 (SUGAM) cannot be used by an individual/HUF:
In case the assesse keeps and maintains all books of accounts and other documents referred to in section 44AA, and also gets his accounts audited and obtains an audit report as per section 44AB, filling up the Form ITR – 4 (SUGAM) is not mandatory. In such a case, other regular return forms viz. Form ITR – 3 or Form ITR – 5, as applicable, should be used.
An individual carrying on a business or profession must file his return of income on or before 31st July of an assessment year. If he is subject to tax audit, he can file his return anytime on or before 30th September of the assessment year. These due dates apply in the normal course unless there is an extension of due dates announced by the Central Board of Direct Taxes (CBDT).
In the case of a businessman, if his total turnover from business exceeds 1 crore, he is liable to an audit under the Income-tax Act under Section 44AB. In case he is a professional, if his gross receipts exceed 25 lakhs, he is liable for a tax audit.
Yes. If your turnover from business exceeds 25 lakhs in any one of the immediately 3 preceding years, you must maintain books of accounts. Not doing so can attract a penalty of 25,000.
If you have opted for the presumptive scheme of tax, you may not be liable to pay advance tax every quarter but you must ensure you are paying all your advance taxes on or before 15th March of the concerned financial year. Further, any taxes paid before the 31st March will be considered as advance taxes only.
No. Once a person declares the prescribed percentage of his gross receipts or turnover as income, he cannot once again claim any other expenses as a deduction.
No. A person opting for presumptive income scheme under Section 44AD, 44ADA, 44AE etc, need not maintain any books of accounts.
Once you opt for this scheme, you must follow it for the next 5 years. Opting out of it for any 1 year during these 5 years will make you ineligible to again opt for it the 5 years immediately following the year when you opted out of it.For example, an assessee claims to be taxed on presumptive basis under Section 44AD for AY 2016-17. For AY 2017-17 and 2018-19 also he offers income on basis of presumptive taxation scheme. However, for AY 2019-20, he did not opt for presumptive taxation Scheme. In this case, he will not be eligible to claim benefit of presumptive taxation scheme for next five AYs, i.e. from AY 2020-21 to 2024-25.
If an assessee meets the following criteria, then he/she must maintain books and get accounts audited under section 44AB:
Yes, a person can use 44AD and 44ADA simultaneously if he has income from both businesses, as well as a profession.
You need to have at least one goods carriage vehicle in order to be eligible to show income u/s 44E while filing return. Otherwise, without a single goods carriage vehicle, an individual cannot be said to be engaged in the business of goods carriage and hence would not be eligible for showing presumptive income u/s 44E.
Section 44ADA applies to resident assesses. Since, an RNOR is also a resident assessee; it applies to you as well. Hence, you can file returns under 44ADA.
Yes, a management consultant can avail presumptive taxation under section 44AD, since a management consultant is not covered under the persons excluded from applicability of Section 44AD.
Yes, the limit of 5 years also applies to Section 44ADA.
Section 44AD is applicable to small business to provide them ease of compliance and save them from requirement of maintenance of detailed books and getting them audited annually. Hence, small business can avail the benefit of showing 8% profit even if it is 20%. However, ethically, they should show the actual amount of profit as 8% is the minimum profit to be shown.
Google adsense earnings are of the nature of commission income as they are received for display of advertisements on the person’s page, video or other online content. Since commission and brokerage income have been specifically excluded from applicability of section 44AD and neither are they included in the applicability of Section 44 ADA which applies only to certain specified professions.
No, you cannot file ITR 4 if a person earns income from brokerage for A.Y. 2018-19, since ITR 4 is for individuals showing business income u/s 44 AD and brokerage has been specifically excluded from the scope of Section 44AD.
This feature is presently not available and will be enabled shortly. You may still go ahead and file the form by selecting “I do not have UDIN / I will update later”. Once the UDIN feature made available for all the forms, you can update the same in the portal.
Before filing Form 10B, please update your profile from the “My Profile” section and ensure that all mandatory fields (Mobile Number with country code, Email and Designation of the person to whom it belongs, Country, Flat/Door/Building, Pin code/Zip code, Post office, Area/Locality, District/City, State) are filled. Try not to use special characters while filling the address section. Also ensure that that the key person who will be appointed as principal contact and authorized to e-verify are chosen correctly. Ensure all the details such as PAN, Name, designation, DIN, Residential status, mobile number along with country code, email id and other mandatory details are updated. Also, verify whether the status of the DSC registered is appearing as ‘Yes’ (if the mode of filing is through DSC). After updating your profile details, you can re-login and try again.
Form 29B is available on the e-Filing portal. Form 29B is required to be assigned by Taxpayer to their Chartered Accountant (CA). You can assign the Form after initiating the Form through file Form functionality or My CA functionality available at the portal.
Once the taxpayer assigns the Form, the CA can access this Form in his / her worklist. Once uploaded by CA, Taxpayer can access and accept the Form under his Worklist.
You might have missed filling Part 3 of “Report of an accountant”. In case the field is not applicable, you can enter “NA” in the text box provided below para 3 of “Report for an Accountant” and try resubmitting the form.
This is observed when “Profile” of the User is not updated correctly. Please ensure that there is no mismatch in the information filled in the Form and your profile. After updating your profile, re-login to the e-Filing portal and try again.
It is likely that you are working on old drafts of the Form 29B. Please delete the draft and file a fresh form.
You should withdraw/delete old form which is already saved in “File Income-tax Forms” and start the fresh filing of the Form. Ensure that all fields including address fields are fully updated in the verification panel and retry submitting the form.
Both the forms are available to users in the e-Filing portal.
Ensure that you are filing Form 10E for Assessment year 2021-22. In order to file Form 10E for Assessment year 2021-22, click e-File>Income-tax Forms>File Income-tax Forms. Scroll down to find the tab “Persons without Business/Professional Income” Click on File now. Select Assessment Year as 2021-22 and click on Continue.
Ensure that you have filled in all income details (including previous year income details in Table A). The taxes will be automatically displayed based on the slab rate. Verify if the income as per the details available on the portal matches with your calculation and insert the amount of tax in the respective table.
Yes, it is mandatory to file Form 10-IE only in case, you want to opt for new tax regime and have Income under the Head “Profits and Gains of Business and Profession.
In case you do not file form 10-IE before filing your ITR, you cannot opt for new tax regime.
Before, filing Form 10-IE please update “Contact Details” (or “Key Person Details” in case you are an HUF) under “My Profile” and ensure that all mandatory fields are filled.
After updating your Contact details from your profile, you can re-login and try again.
Please delete the old draft of the form by clicking on “Delete Draft” and try re-submitting Form 10-IE.
You are requested to update the “Key Person Details” under “My Profile” section. Re-login to the e-Filing portal and try again.
In case you don’t have any business, income and are required to file ITR 1/ ITR 2, there is no need to file Form 10-IE in order to opt for the new tax regime under Section 115BAC of the Income-tax Act, 1961. The option to exercise the benefit under Section 115BAC, in case you do not have business income, can be claimed while filing the respective ITR form (ITR 1/ ITR 2).
The error might be due to naming convention used in the file. Please avoid using any special characters in the file name and keep the file name small. In addition, the size of the attachment should be less than 5 MB and the attachment should be in PDF or Zip format only.
In case you are facing such issue while submitting the form, ensure that steps mentioned for updating profile are completed. Additionally, delete the old draft of the form by clicking on “Delete Draft”. Re-log in to the e-Filing portal and try again.
Open the 4th panel, i.e., "Appeal details”
Once these fields are updated, go to 7th panel i.e., “Appeal filing details” and try deleting and re-entering the challan details.
You should delete the ‘Draft’ Form 10-IC which is already saved in “File Income-tax Forms” and start the fresh filing of the Form.
You should delete the ‘Draft’ Form 10-IC which is already saved in “File Income-tax Forms” and start the fresh filing of the Form.
You should delete the ‘Draft’ Form 10-IB which is already saved in “File Income-tax Forms” and start the fresh filing of the Form.
You should delete the ‘Draft’ Form 10-ID which is already saved in “File Income-tax Forms” and start the fresh filing of the Form.