Amendments of Section 44AB

Amendments of Section 44AB

Amendments of Section 44AB have been made to reduce the compliance burden on small taxpayers and to bring more transparency in the tax system. The requirement of tax audit will apply only to those taxpayers whose turnover exceeds the specified limit and will not be applicable to those whose turnover is less than the limit.

SECTION 44AB: RECENT AMENDMENTS UNDER INCOME TAX ACT

There are various kinds of audits being conducted under different laws such as company audit/statutory audit conducted under company law provisions, cost audit, stock audit, etc. Similarly, income tax law also mandates an audit called ‘Tax Audit’.

As the name itself suggests, a tax audit is an examination or review of accounts of any business or profession carried out by taxpayers from an income tax viewpoint. It makes the process of income computation for filing of return of income easier.

What are the objectives of a Tax Audit

  • Ensure proper maintenance and correctness of books of accounts and certification of the same by a tax auditor
  • To report prescribed information such as tax depreciation, compliance with various provisions of income tax law, etc.
  • Reporting observations/discrepancies noted by tax auditor after a methodical examination of the books of account.

Applicability of Tax Audit

Section 44AB of the Income-tax Act, 1961 Every person

(a) Carrying on business shall, if his total sales, turnover, or gross receipts, as the case may be, in business exceeds, one crore rupees (w.e.f AY 2013-14) in any previous year shall get his accounts audited by a chartered Accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such Chartered Accountant and setting forth such particulars as may be prescribed.

In the following circumstances, the figure of rupees one crore is substituted by ten crore rupees.

Provided that in the case of a person whose—

(a) an aggregate of all amounts received including the amount received for sales, turnover, or gross receipts during the previous year, in cash, does not exceed five percent of the said amount; and

(b) Aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five percent of the said payment, this clause shall have effect as if for the words “one crore rupees”, the words ” [ten] crore rupees” had been substituted:] [Provided further that for the purposes of this clause, the payment or receipt, as the case may be, by a cheque drawn on a bank or by a bank draft, which does not account payee, shall be deemed to be the payment or receipt, as the case may be, in cash

For a person who carries on his/her profession shall get the accounts audited if

(b) carrying on profession shall if his gross receipts in profession exceed fifty lakh rupees in any previous year; or If the profit is shown lower than the profits as per section 44AE, 44BB, 44BBB shall get the accounts audited

If the profit is shown lower than the profits as per section 44AE, 44BB, 44BBB shall get the accounts audited

(c) carrying on the business shall if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AEor section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or

If income exceeds the exemption limit and the assessee has shown less profit as per section 44ADA shall get the accounts audited

(d) carrying on the profession shall if the profits and gains from the profession are deemed to be the profits and gains of such person under section 44ADAand he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or

If the income exceeds the exemption limit and the provision of sub-section 4 of section 44AD is applicable shall get the accounts audited

(e) carrying on the business shall if the provisions of sub-section (4) of section 44ADare applicable in his case and his income exceed the maximum amount which is not chargeable to income-tax in any previous year

Section 44AB is not applicable as per the following provision

Provided further that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BBA, on and from the 1st day of April 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later :

The following proviso says if books are audited as required under any other law, an audit report is submitted as required under such other law,

and a further report on the basis of same books audited as required under other law shall be submitted by Chartered Accountant as required under this section of Income Tax

Provided also that in a case where such person is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section,

if such person gets the accounts of such business or profession audited under such law before the specified date and furnishes by that date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this section.

 

 

 

Don't forget to share this article :-

Stay Updated With Our Blogs!

Explore more of our blogs to have better clarity and understanding
of the latest corporate & business updates.

Why People Choose Our Services ?

Free Legal Advice

We provide free of cost consultation and legal advice to our clients.

Tech Driven Platform

All our services are online no need you to travel from your place to get our services.

Grow your business

Experts Team

We are a team of more than 15+ professionals with 11 years of experience.

Transparent pricing

There are no hidden & extra charges* other than the quote/invoice we provide.

100 % Client Satisfaction

We aim that all our customers are fully satisfied with our services.

On-Time Delivery

We value your time and we promise all our services are delivered on time.

Why Trust legal Suvidha?

People Who loved our services and what they feel.

In this Journey of the past 10+ years, we had gained the trust of many startups, businesses, and professionals in India and stand with a 4.9/5 rating in google reviews.

Rajesh Srivastava
Rajesh Srivastava
Startup CEO
Read More
Great services and expertise. Highly recommended, Quick work and provided good support for the entire process. Made things very easier for us and I got my first ever Trademark for my product in just no time. I recommend their services to all the Startups for a hassle-free registration and other services. Again Thank You So Much Team Legal Suvidha... Good work...
Vijaya
Vijaya
Employee
Read More
Excellent service and has been very timely in response. They are very patient too and guided us with the right steps even though we approached them with very few days left before the deadline. I highly recommend them to other startups who need legal advice and do all the paperwork at the year-end. And we would approach them for all our future requirements as well.
Krish Mundarath
Krish Mundarath
Businessman
Read More
We highly recommend them. Best in class services. Thank you for helping me through the process and for prompt replies. All the Best in your Endeavors. We highly recommend them. Best in class services. Thank you for helping me through the process and for prompt replies. All the Best in your Endeavors. I will surely consider them for future work.
Inamul Hashmi
Inamul Hashmi
Businessman
Read More
Legal Suvidha filed my GST, Income Tax Returns for my business Happy by their service. They are Excellent, cost effective, efficient, co-operative & Genuine service providers keep up the good work in the future. Thank you for shaping my business in the right direction. I would suggest others to take up their services they are better than other competitions present in the market.
Previous
Next

Our Partnerships & Collaborations

Contact us and grow your business

Legal Suvidha App

Now all Professional Services in a Single Click !

Now get all the services required for your business in a single app.

Subscribe to our newsletter & grow your business

Subscribe To Our Newsletter .

Sign up to receive email updates on new product announcements, special promotions, sales & more.