AY 2020-21 this due date of filing return of income for tax audit assessees has been amended to 31st Oct,2020. Is such a case, it shall be sufficient if such person gets the accounts of such business or profession audited under such other 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. Because Section 44AB reads as under: "Audit of accounts of certain persons carrying on business or profession”. Section 44AB of Income Tax Act. Because , Sec 44 AD [1] provisions applicable to eligible business. In such situation, there are two more situation may arise –. 5. According to third proviso to section 44AB, if a person is required by or under any other law to get his accounts audited, then he need not get his accounts audited again to comply with the requirement of section 44AB. I need to figure whether my return needs to be audited or not. Section 44AB. Yes, will make necessary changes. Audit report under section 44AB of the Income-tax Act,1961 in a case where the accounts of the business or profession of a person have been audited under any other law: Download: Form 3CB-3CD: Audit report under section 44AB of the Income-tax Act,1961, in the case of a person referred to in clause (b) of sub-rule (1) of rule 6G: Download: Form 3CEB [ that above Rs. Explanation. This is the perfect analysis of the 2 sections. Its available online on the income tax departments website. 5 crores for the tax audit is inserted below clause (a) to section 44AB. Copyright © TaxGuru. 2] His aggregate of all payments in cash during the previous year does not exceeds 5 % of such payments. 12(a) and (b) of Form 3CD Para No. The Section 44AB of the Income Tax Act enjoins provisions regarding tax audit under IT Audit. If total income exceeds basic exemption limit only then tax audit is applicable. Disclaimer: The information contained in this article is intended solely for the dissemination of information and doesn’t aim at soliciting work in any manner. For this purpose, section 44AB of the Income Tax Act, 1961 is amended vide clause 23 of the Finance Bill, 2020. If profit is at least 50% of gross receipts of profession, then one can go for sec 44ADA nd avoid tax audit. Section 44AB. In this scenario, person will not require to audit as he satisfy condition stated in Sec 44 AB [a] and Sec 44 AD [1] ‘b] His total profit or income for that business which is eligible business and. Plz read the bare act again. In other words, if certain individuals meet the requisites as prescribed under Section 44AB, then these individuals will have to ensure that their accounts are audited by a certified Chartered Accountant. Thus, where audit is done under other law then 3CA plus 3CD is applicable instead of 3CB plus 3CD. Section 44AB of the Income Tax Act deals with the audit of accounts of certain individuals. Can you please tell me their slabs or provisions 1. (b) A person carrying on profession: The total gross receipts exceeds rs. The amended provision of section 44AB is effective for financial year 2020-21 relevant to the assessment year 2021-22. However, tax audit may be applicable under clause (b), (c), (d) & (e) when Sec 44AB is read with Sec 44AD. Accordingly 44AD(5) will also not be applicable. It is very say that new amendments in 2020 is not suitable for small taxpayers compared to Middle and Higher class taxpayers. 4 crores. Sir, What is meant by cash payments has to be less than 5% or total payments? 5 crore if the following conditions are satisfied –. In this scenario, person will not require to audit as he satisfy condition stated in Sec 44 AD [1]. 50 Lakhs. CA Shirish Vinchurkar – Chartered Accountants, Chalisgaon, email : [email protected]. In order to submit a comment to this post, please write this code along with your comment: ade3c276b2177f4da990677856cad2a3. 3CB - Audit report under section 44AB of the Income-tax Act, 1961, in the case of a person referred to in clause (b) of sub-rule (1) of rule 6G; Form No. [ that above Rs. “, ‘b] His total profit or income for that business which is eligible business and person is eligible assessee, is below 8 % of 6 % [ if his gross total turnover or receipts recd in banking mode]. 17 [Audit of accounts of certain persons carrying on business or profession.. 18 44AB. 3CD.] Section 44AB has been introduced in the Income-tax Act, 1961, by the Finance Act, 1984. Section 44AB gives the provisions relating to the class of taxpayers who are mandatorily required to get their accounts audited from a chartered accountant. Recently, we have discussed in detail section 44AA (maintenance of accounts by certain persons carrying on profession or business) of IT Act 1961. So from the above discussion, the summary of the provisions are tabulated as below: So from the above discussion and table, the small eligible asseesee who has eligible business, though his turnover is below 2 crore , and his total cash receipts and cash payments is below 5 % of such receipts or payments, is required to get his books of account audited as per sec 44 AD and assessee whose turnover is more than 2 crore , and if his total cash receipts and total cash payments is less than or equal to 5 % of such receipts or payments, is not required to get his books of account audited u/s 44 AB ,So his burden of compliance is reduced but assessee whose turnover is below 2 crore , his burden of compliance is not reduced. Thanks. Every person, -- (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees* in any previous year; What is the implication of "any previous year"? Please go through and let me no , if there is any error or omissions. The above article is based on the authors private view. If total income exceeds basic exemption limit only then tax audit is applicable, 3. Salil. All Rights Reserved. 30th September of the relevant assessment year. Provisions of Sec 44AB will not applicable to him because Sec 44 AB provided clearly that –, “ Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of the sub-section [1] of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year. 3CA/3CB and 3CD. Form No. In this scenario, . 1 crore in case of the business or Rs. The examination is conducted to ensure that the taxpayer has properly maintained the books of accounts and other records. 3CA - Audit report under section 44AB of the Income-tax Act, 1961, in a case where the accounts of the … 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 provisions of Section 44AB have been amended by the Finance Act, 2020 giving rise to major confusion in the minds of businessmen and professionals alike. Clause 44AB(a) 2. Difficult to Genuine Tax Payers, Discussion on GST Notification No. It means in above case, if person shows his profit below 8 % of 6 % of his total sales etc, he will not require to get his books of account audited . In this case , assessee has to get his books of account audited as per provisions of sec 44 AD [1]. Relevant Clause of 44AB: Description: Clause (a) In case the assessee is carrying on business and his total sales, turnover or gross receipts as the case may be, exceeds one crore in the relevant previous year. 3CB and the prescribed particulars are to be reported in Form No. (e) carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year. Salil. Nice , feeling like you r talking diectly…, Your email address will not be published. 44AB. Audit has to be done u/s 44 AD[5] of the Income Tax Act, 1961. Can such asseesse file tax audit report if they want? This provision is not applicable to the person, who opts for presumptive taxation scheme under section 44AD and his total sales or turnover doesn’t exceed Rs. My Interest Income is over and above 1 Cr, turnover limit for Sec 44AD ( )... 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