Tax Audit Applicability for Financial Year (FY) 2019-20 (Assessment Year 2020-21)
As per Section 44AB of Income Tax Act, 1961, Income Tax Audit Limit for AY 2020-21 for Audit of accounts in cases of certain persons carrying on business or profession is as below-
Tax audit Requirement for AY 2020-21(i.e. Income Tax Audit Limit for FY 2019-20) for person (including companies),
(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 during the previous year, in cash, including amount received for sales, 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,
Income Tax audit turnover limit or sales or gross receipts for AY 2020-21 shall be "five crore rupees", instead of "one crore rupees", or
(b) Carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year,
(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; 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; 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,
get his accounts for FY 2019-20 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,
Provided that Tax Audit 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 any previous year:
Provided further that Tax Audit 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 Tax audit 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.
*Section 44AE- The presumptive taxation scheme of section 44AE can be adopted by a person who is engaged in the business of plying, hiring or leasing of goods carriages and who does not own more than 10 goods vehicles at any time during the year
**Section 44BB- In the case of an assessee, being a non-resident, engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils, a sum equal to ten per cent of the aggregate of the amounts specified in sub-section (2) of Section 44BB shall be deemed to be the profits and gains of such business chargeable to tax,
***Section 44BBB- In the case of an assessee, being a foreign company, engaged in the business of civil construction or the business of erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project approved by the Central Government in this behalf, a sum equal to ten per cent of the amount paid or payable (whether in or out of India) to the said assessee or to any person on his behalf on account of such civil construction, erection, testing or commissioning shall be deemed to be the profits and gains of such business chargeable to tax.
****Section 44ADA- A person resident in India engaged in the professions referred to in sub-section (1) of section 44AA can take advantage of presumptive taxation scheme, if their total gross receipts do not exceed fifty lakh rupees.
*****Section 44AD-The scheme of section 44AD is designed to give relief to small taxpayers engaged in any business, except the following businesses:
-
Business of plying, hiring or leasing of goods carriages referred to in section 44AE.
-
A person who is carrying on any agency business.
-
A person who is earning income in the nature of commission or brokerage
The presumptive taxation scheme of section 44AD can be opted by the above eligible persons, if the total turnover or gross receipts from the business do not exceed Rupees Two Crores,
In case of a person adopting the provisions of section 44AD, income is computed on presumptive basis at the rate of 8% of the turnover or gross receipts of the eligible business for the year, and 6% if the transactions are done in electronic mode of payment.