Amendment in Audit Threshold Limit u/s 44AB of Income Tax Act


3
Audit of accounts of certain persons carrying on business or profession [Section 44AB]-New Proviso has been inserted in sub-clause (a) of section 44AB in finance bill 2020 which is as under:-
  1. A new proviso has been inserted in sub-clause (a) of section 44AB, which is as under:
    • The threshold limit of section 44AB(a) has been increased from one crore rupees to five crore rupees. This proviso is applicable only in cases where both the below conditions are satisfied:
    • aggregate of all amount received including amount received for sales, turnover or gross receipts, in cash during the previous year does not exceed five per cent of such amount; and
    • aggregate of all payments made including amount incurred for expenditure, in cash during the previous year does not exceed five per cent of such payment.
  2. In the Explanation, in clause (ii), after the word “means”, the words “date one month prior to” shall be inserted.

    Analysis: –

    To enable pre-filling of returns in case of persons having income from business or profession, it is required that the tax audit report may be furnished by the said assessees at least one month prior to the due date of filing of return of income

  3. This amendment is applicable from the A.Y. 2021-22.
 Extract of old Section 44AB:

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; 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

 (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:

Explanation. —For the purposes of this section, —

  (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 the due date for furnishing the return of income under sub-section (1) of section 139.


Like it? Share with your friends!

3

0 Comments

Your email address will not be published. Required fields are marked *