Applicability of Tax Audit 2024: Tax Audit under area 44 AB is an effective tool for the income-tax department to help them in making assessment of its assessees. After the obligatory e-filing of tax audit reports the significance of tax audits have actually increased enormously.
Content in this Short Article.
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Applicability of Section 44 AB
- An Individual who is continuing organization, and whose total sales/turnover/gross receipts from business surpasses Rs. 1 crore.
- Exception— The above arrangement is not appropriate to the individual, who selects presumptive tax plan under area 44 ADVERTISEMENT and his overall sales/turnover does not goes beyond Rs. 2 crores.( Previously this limit was Rs. 1 Crore prior to 2016 Spending Plan)
- A person who is eligible to opt for the presumptive taxation scheme of area 44 AD but declares the earnings or gains for such organization under non– presumptive scheme which is lower than the earnings and gains calculated according to the presumptive tax scheme of area 44 AD and his earnings goes beyond the amount which is not chargeable to tax.
Applicability of Area 44 ADVERTISEMENT
An individual can select presumptive plan under area 44 AD
- Only applies in case of Individual, Partnership & HUF supplied they are Resident in India.
- who is bring his company and his total sales/turnover does not surpasses Rs. 2 crores and
- who is not declaring deductions under area 10 A/10 AA/10 B/10 Bachelor’s Degree or under sections 80 HH to 80 RRB in the appropriate year and
- who is not carrying business of.
- plying, working with or renting products carriages referred to in areas 44 AE.
- any agency business. and
- who is not making earnings in the nature of commission or brokerage
In case of an individual adopting the arrangements of area 44 AD, earnings will be calculated on presumptive basis, i.e., a minimum of @ 8% of the turnover or gross receipts (6% in respect of overall turnover or gross invoices which is gotten by an account payee cheque or draft or use of electronic clearing system or through such other electronic mode) of the eligible business for the year and the arrangements of allowance/disallowances as supplied under the Income-tax Law will not use. Nevertheless, the assessee can declare reduction under chapter VI-A.
Amendments in Budget Plan 2024-2024
Turnover not more than Rs. 5 crores, however Cash invoices not exceeding 5% of overall turnover and cash payments not exceeding 5% of total expenditure
⇓
Not accountable for Tax Audit from F.Y 2024-2024 onwards
Example– A business having turnover Rs. 4.5 crores in F.Y 2024-21, then that business is not responsible for tax audit.
Turnover less than Rs. 2 crores( but more than Rs.1 crore), but Money receipts going beyond 5% of overall turnover and money payments exceeding 5% of overall expenditure
⇓
Responsible for Tax Audit under section 44 AB from F.Y 2024-2024 onwards if the assessee does not state earnings at least 6% or 8% as per section 44 AD
Example– A business having turnover Rs. 1.5 crores in F.Y 2024-21 and more than 5% of business transaction remains in money will be accountable to Tax Audit if the assessee does not show Earnings at least 6% or 8% as per section 44 AD.
Rationale for boost in limitation of Tax Audit based on limited money deal
- Reduction in compliance concern on MSME Sector
- Increase up cash less economy
Modification in Due Date of Tax Audit and Tax Return Filing
| Due Date of filing ITR for tax payers who are required to get their Accounts Audited | 31 st October |
| Due Date of filing Tax Audit Report | 30 th September (One month prior to due date of Income Tax Return Filing) |
Currently, Tax Audit Report along with Tax Return is required to be sent on or prior to 30 th September whereas the above proposed change will be effective from F.Y 2024-21 onwards.
Rationale for modification in Due Date
- To allow pre-filing of returns on basis of audit reports
Types of Tax Audit FORM
Tax auditor will furnish his report in a prescribed kind
Type No. 3CA is applicable for area 44 AB and this kind is to be provided when a person carrying on company or occupation is mandatorily to get his accounts examined under any other law.
Type No. 3CB applies for section 44 AD and this type is to be furnished when a person continuing business or occupation is not needed to get his accounts examined under any other law.
However tax auditor must provide the recommended details in Type No. 3CD, which forms part of audit report and it is obligatory for Area 44 AB along with Area 44 ADVERTISEMENT where relevant strictly stick to Guideline 6G( 2) of the Income Tax Rules 1962.
Penalty of non filing or delay in filing tax audit report
If any taxpayer needed to get the tax audit, but stops working to do so, the least of the following may be imposed as a charge:
- 0.5% of the total sales, turnover or gross invoices
- Rs 1,50,000
Recommended
- Evaluation Year (AY) & Previous Year (PY)
- incometaxefiling
- TDS Rate Chart
- PAN Call By PAN No
- Earnings Tax Piece Rates
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