Step By Step Guide To Tax Audit - Tax Audit U/s 44AB AY 2020-21 Including amendments for FY 2019-20. check out Due date of Tax audit, Tax Audit Slab is increased, Check details from below. Here we are providing Step By Step Guide on Tax Audit. Check complete steps for How to do Tax Audit . In this article you can find all steps for how to do tax audit . Now you can scroll down below and check more details for "Step By Step Guide To Tax Audit"
If you like this article then please like us on Facebook so that you can get our updates in future ……….and subscribe to our mailing list ” freely “Tax Audit Meaning:
- A Tax Audit is an audit, made compulsory by the Income Tax Act, if the annual gross turnover/receipts of the assesse exceed the specified limit. Tax audit is conducted in Sec 44AB of the Income Tax Act,1961 by a Chartered Accountant.
- Simply Tax Audit means, an audit of matters related to tax.
For the AY 2020-21, the due date for tax audit is 31 December 2020.
Tax Audit Applicability:
The Following persons need to be liable for tax audit Us 44 AB- Business: Rs. 1 Crore. It means an assesse need to be audited under Sec.44AB if his annual gross turnover/receipts in business exceeds Rs. 1 Crore.
- Profession: Rs. 50 Lakh. It means an assesse need to be audited under Sec 44AB if his annual gross receipts in profession exceeds Rs. 50 Lakh.
Applicability of Section 44AB
- A Person who is carrying on business, and whose total sales/turnover/gross receipts from business exceeds Rs. 1 crore.
- Exception – The above provision is not applicable to the person, who opts for presumptive taxation scheme under section 44AD and his total sales/turnover does not exceeds Rs. 2 crores.(Previously this limit was Rs. 1 Crore before 2016 Budget)
- A person who is eligible to opt for the presumptive taxation scheme of section 44AD but claims the profits or gains for such business under non – presumptive scheme which is lower than the profits and gains computed as per the presumptive taxation scheme of section 44AD and his income exceeds the amount which is not chargeable to tax.
Amendments in Budget 2020-2021
Turnover not more than Rs. 5 crores, but Cash receipts not exceeding 5% of total turnover and cash payments not exceeding 5% of total expenditure
⇓
Not liable for Tax Audit from F.Y 2020-2021 onwards
Example - A company having turnover Rs. 4.5 crores in F.Y 2020-21, then that company is not liable for tax audit.
Turnover less than Rs. 2 crores(but more than Rs.1 crore), but Cash receipts exceeding 5% of total turnover and cash payments exceeding 5% of total expenditure
⇓
Liable for Tax Audit under section 44AB from F.Y 2020-2021 onwards if the assessee does not declare profits at least 6% or 8% as per section 44AD
Presumptive Taxation Scheme – Sec 44AD
- Businesses, whose annual gross turnover/receipt does not exceeds Rs. 2 Crore are eligible for this scheme.
- Sec 44AD provides special provision for computing profits and gains of business on presumptive basis.
- U/s 44AD need not maintain books of Accounts.
- Net income is estimated to be @8% of your gross receipt/turnover.
- If Gross receipts are received through digital mode of payments,
- Net income can be calculated as @6% and
- @ 8% of gross receipts are received through cash.
- If Assesse opt for Presumptive taxation u/s 44AD, then he should be follow same section of audit for next 5 Financial years.
- You need to file ITR 4 (previously ITR4S) to avail these scheme.
Presumptive Taxation Scheme – Sec 44ADA
A person resident in India engaged in following professions can take advantage of presumptive taxation scheme of section 44ADA:-- Legal
- Medical
- Engineering or architectural
- Accountancy
- Technical consultancy
- Interior decoration
- Any other profession as notified by CBDT
Tax Audit for others u/s 44AB
Tax Audit will be applicable for the following businesses also, with respect to specified limit as per section 44AB:- 44AE- Business of plying, hiring or leasing goods carriages.
- 44B- Shipping business of non-residents. @ 7.5%
- 44BB- Business of exploration of mineral oils. @ 10%
- 44BBA- Operation of Aircraft by non-resident. @ 5%
- 44BBB- Foreign companies engaged in civil construction, etc. in turnkey power projects. @ 10%
Amendments of Clauses in 3CD report from FY 2017-18 w.e.f 20.08.2018
Clause 4 Clause 19 Clause 24 Clause 26(g) Clause 31 | Clause 34 Clause 29(a) Clause 29(b) Clause 30(a) Clause 30(b) | Clause 30(c) Clause 36(a) Clause 42 Clause 43 Clause 44 |
Tax Audit Report Forms U/s 44AB
- Form 3CA
- Form 3CB
- Form 3CD
Tax audit.
- 3CA Report will be applicable for only Companies.
to Tax audit.
- 3CB Report will be applicable for Assesses other than companies.
later slides.
- This is applicable for all Assesees.