There were more than 13 lakh companies registered in India in the year 2014 as per MCA report. 5 crores for business under section 44AB where at least 95 percent turnover is made on digital transactions. (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, get his accounts of such previous year audited by an 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 accountant and setting forth such particulars as may be prescribed : 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 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: The chart below will throw some extra lights on the provision mention above and show clearly about Tax Audit Limit for FY 2019-20. 40,000/50,000 shall be computed with reference to the income credited or paid by a banking company or co-operative bank (and not by individual branch thereof) which has adopted core banking solutions ('CBS'). Due to COVID-19 govt has extended this date from 30th September to 31st December 2020. FAQs on Tax audit. Section 44 AB- This section deals with the tax audit limit and provision of Tax Audit. Address:- New Tax Route, 106, Dharma Palace, Begum Bridge Road, Meerut, Uttar Pradesh, 250002, Tax Audit Limit For FY 2019-20: Know about Tax Audit u/s 44AB of The Income Tax Act, Tax Audit Limit for Individual/HUF/firm engaged in Business, Tax Audit Limit for Individual/HUF/firm engaged in Profession, Extension of Tax Audit Due Date for FY 2019-20, Condition of cash payment and cash receipts, Should The Last Date of ITR and Tax Audit Need to be Extended. 50 Lakh for Profession in FY 2019-20 / AY 2020-21. Help (e) Where person is carrying on the business shall, and the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the basic threshold limit which is not chargeable to income-tax in any previous year then he is liable for tax audit. In FY 16-17 we filed Income Tax Return u/s 44AD, In FY 17-18 turnover was 3cr so we Filed Tax Audit.Now in FY 18-19 our Turnover is 1.75 CR, We are liable to Tax Audit.? Here is the solution. However they have mentioned that tax audit date of 31.10.2020 is now 30.11.2020 which seems a mistake. In order to boost less cash economy, the increased threshold limit for tax audit shall apply only to those businesses which carry out less than 5% of their business transactions in cash. (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; From AY 20-21, Govt. Consequently, the date for furnishing tax audit report was also been extended to 31st October 2020. The Finance Act 2020 has made some major changes in tax audit provision leading to changes in threshold limit. I have more than 5+ years of acetic and delightful experience in Blogging and writing on more than 100+ topics in English and Hindi both. Currently, businesses having turnover of more … Although section 44AB limit is still Rs. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article. (ii)  Aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent of the said payment. Though no changes has been made in made in tax slabs , yet a rebate of maximum amount of Rs 12500 has been allowed to persons having taxable income up to Rs 500000/-. Earlier till AY 2019-20, the tax audit report was required to be filed along with the return of income. The Tax Audit turnover threshold limit has been increased to Rs. The Section 44AB of the Income-tax Act, 1961 states the regulations for the tax audit of a firm or entity. In this article, we have highlighted the key changes introduced in ITR-1 and ITR-2 which should be kept in mind while filing return for assessment year 2020-21. or We can File Income Tax Return U/s 44AD.?. I was not pro or perfect however I started imperfectly and achieved my end goals. are required to do Transfer pricing audit. 3CD. For AY 2020-21 LLP tax audit due date is 30 September 2020. 50 Lakh. 79/2020 – Central Tax dated 15.10.2020 amending CGST rules, 2017 wherein there are some options/concessions in filing Form GSTR 9 & 9C even for FY 2019-20. b) The threshold limit of Rs. Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. Tax audit is governed by section 44AB of the Income tax act. However, it does not constitute professional advice or a formal recommendation. This is to be conducted by a Chartered Accountant. 1.2 Tax audit limit for Profession : Rs. The limit for turnover under Section 44AB is INR 1 Cr. Always remember the caption “You never lose, either you win it or learn it “ The date of 31.10.2020 was made by FA 2020 recently which is applicable from FY 2020-21 onwards. You can find here tax audit limit for businesses, tax audit limit for professionals (like doctors, accountants, architects etc. for Business in FY 2017-18 / AY 2018-19. Copyright 2020. Tax audit report should be filed up to 30 th September of the assessment year.. For example Tax audit of the financial year, 2017-18 [AY 2018-19] should be filled on or before 30 th September 2018.. It means the limit of Tax Audit u/s 44AB is Rs. Turnover limit for tax audit NOTE: The threshold limit of Rs 1 crore for a tax audit is proposed to be increased to Rs 5 crore with effect from AY 2020-21 (FY 2019-20) if the taxpayer’s cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are … Faceless Compliance TM. Due Date or Last Date to File Tax Audit . If total income exceeds basic exemption limit only then tax audit is applicable. 5 crores. Tax Assessment (Slab Rate) for the year 2019 - 20 We also assist you in tax compliance and filing of various forms with the help of a team of experts. 8% of his remaining turnover or gross receiptThe 6% or 8% is the minimum taxable limit and declaration of business income below this limit will cause a taxpayer to maintain proper books of accounts in order to justify his low income. In the same way tax audit is governed by income tax law, as the name suggests, a tax audit is an examination or review of accounts of any business or profession carried out by taxpayers from an income tax point of view. And assesse has claimed income lower than the deemed profits to be required to show under the head profits and gains of business, as the case may be, in any previous year then he is liable for tax audit. Income Tax Audit due date for FY 2019-20. But before know the applicability of the Tax Audit, everyone should know the Meaning of the Tax Audit. 1 crore and 44AD limit is 2 Crore (except specified above). 5 crores for the person who is carrying on business and fulfills the below conditions-, (i)  The 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 total turnover/gross receipts; and. Contact us- [email protected]. First time extension- Due to the COVID-19 situation in the country, the government via a press release dated June 24, 2020, announced the following- The due date for the income tax return for the FY 2019-20 (AY 2020-21) has been extended to 30th November 2020. The said limit will be effective for the audits conducted during the financial year 2014-15 and onwards. Under this section, an eligible assessee engaged in eligible business with turnover less than 2 Crore can consider his taxable business income (PGBP) as – 1. LLP under International Transactions LLP who doing international transactions with its associated enterprises etc. Sec 44AD provides special provision for computing profits and gains of Business on presumptive basis. Under Budget 2020, the turnover limit under Sec 44AB has been increased from INR 1 Cr to 5 Cr if the following conditions are satisfied:. As per section 44AB a person is required to conduct compulsory audit of books of accounts if the turnover or gross receipts of business or profession crosses the threshold limit. Where the person is carrying on business shall and his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds Rs. The Finance Act 2020 has made amendment in the threshold limit of tax audit under section 44AB. Post was not sent - check your email addresses! The time for filing of original as well as revised income-tax returns for the FY 2018-19 (AY 2019-20) has been extended to July 31, 2020, the Central Board of Direct Taxes (CBDT) said in a statement. d) Specified number of Tax Audit assignments (13-12-2011) Clarification for reckoning the “specified number of tax audit assignments” conducted under section 44AB of the Income-tax Act, 1961 Income Tax Slabs for FY2019-20: The income tax calculator suggests that calculation of income tax in India is done based on applying different tax rates to different annual income groups, which are called income tax slabs. In this article we are going to discuss about the various changes made by the Finance Act 2020 under section 44AB applicable for Financial Year 2019-20, Assessment Year 2020-21 and Financial Year 20-21, Assessment Year 2021-22. Tax audit refers to the activity in which an auditor or tax agency examines or reviews the accounts of a business to check for tax compliance. All Rights Reserved. Cash Payments do not exceed 5% of the Total Payments in the financial year AND; Cash Receipts do not exceed 5% of the Total Receipts in the financial year 1 crore in any previous year is liable for ax audit. In this article, we will try to clear all doubts regarding the applicability of the Tax Audit Limit For FY 2019-20. Meaning of Tax Audit- As we all know there is various type of audits being conducted under different laws such as cost audit, company audit or stock audit, etc. Extension of Registration Procedure under section 12AB of The Income Tax Act 1961. (i)   “accountant” shall have the same meaning as in the Explanation below sub-section (2) of section 288; (ii)  “specified date”, in relation to the accounts of the assessee of the previous year relevant to an assessment year, means 91[date one month prior to] the due date for furnishing the return of income under sub-section (1) of section 139. As we are aware that, the tax audit date is near and due to the COVID impact the audit could not be completed till the last date i.e 31.10.2020. The tax audit limit under section 44AB is as under: (i)  aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent of the said amount; and. It means the limit of Tax Audit u/s 44AB is Rs. Hence it is essential for all private companies to Understand the taxability. Therefore, tax shall be deduction from payment of interest on recurring deposit if it exceeds the threshold limit of Rs. 40,000/50,000. Where the assesse is covered under section 44AB then he is required to get the books of accounts audited by a Chartered Accountant. The tax audit limit of Rs 1 crore has been increased to Rs 5 crore with effect from AY 2020-21 (FY 2019-20) if the taxpayer's cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer's cash payments are limited to 5% of the aggregate payments. The above provision can be summarized as follows: In case of person engaged in business and opting for presumptive taxation under section 44AD: In case of person engaged in business and opting for presumptive taxation under section 44ADA: 44AB(a) Business Turnover Exceed 1 crore44AB(b) Professional Gross receipt exceed 50 lacs44AB(c)‐i Income less than Deemed income u/s 44AE44AB(c)‐ii Income less than Deemed income u/s 44BB44AB(c)‐iii Income less than Deemed income u/s 44BBB44AB(d) for section 44ADA44AB(e) for section 44AD44AB(3) Audited under any other law, (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, [Provided that in the case of a person whose—, (a)  aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent 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 per cent of the said payment, this clause shall have effect as if for the words “one crore rupees”, the words “five crore rupees” had been substituted; or], (b) Carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year; or, (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 44AE or 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, (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 44ADA and 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. …Applicable from AY 20-21. Tax Audit Limit For FY 2019-20: Know about Tax Audit u/s 44AB of The Income Tax Act By Parag Agarwal On December 18, 2020 In Tax Audit , Assessment year 2020-21 , Income Tax tax audit limit under Income Tax for FY 2019-20. CBDT defers Clause 30C and Clause 44 of the Tax Audit Report in … What is Presumptive Taxation Scheme (Sec 44AD) for Business ? (v) Section 4BBB: Presumptive taxation in case of business of exploration of mineral oil etc. There was a doubt in many minds whether the same will be extended to FY 2019-20 or not. This article tried to brief such changes. It means an assessee need to be audited under Sec 44AB if his annual gross receipts in profession exceeds Rs. Provision on wages on account of mandatory wage revision deductible under Income tax, Know How Business can show 6% Profit and File Income Tax Returns without Books of Accounts, Formation of trust with Charity Commissioner. 1 crore in any previous year is liable for ax audit. (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, get his accounts of such previous year audited by an 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 accountant and setting forth such particulars as may be prescribed: 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 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: 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 : 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. 50 lakh in any previous year. 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