Presumptive taxation u/s 44AD Income Tax: Audit Limit w.e.f AY 2017-18

By | June 21, 2018
(Last Updated On: June 21, 2018)

Presumptive taxation u/s 44AD Income Tax: Audit Limit w.e.f AY 2017-18

CIRCULAR No. 2/2018 Dated 15.02.2018

23. Exclusion of certain specified person from requirement of audit of accounts under section 44AB.

23.1 The provisions of section 44AB of the Income-tax Act provide inter alia that every person carrying on the business is required to get his accounts audited if the total sales, turnover or gross receipts in the previous year exceeds one crore rupees. The threshold limit for applicability of presumptive taxation in case of eligible business carried on by eligible person under section 44AD of the Income-tax Act was increased to two crore rupees from one crore rupees with effect from 1st April, 2017 relevant to Assessment year 2017-18 by Finance Act, 2016. Further vide press release dated 20th June, 2016, it was clarified that if an eligible person opts for presumptive taxation scheme as per section 44AD(1) of the Income-tax Act, he shall not be required to get his accounts audited if the total turnover or gross receipts of the relevant previous year does not exceed two crore rupees.

23.2 In light of the above legislative changes and to reduce the compliance burden of the small tax payers and facilitate the ease of doing business, section 44AB of Income-tax Act has been amended so as to exclude the eligible person, who declares profits for the previous year in accordance with the provisions of sub-section (1) of section 44AD of the Income-tax Act and his total sales, total turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year, from requirement of audit of books of accounts under section 44AB of the Income-tax Act.

23.3 Applicability: This amendment takes effect from 1st April, 2017 and will, accordingly, apply from assessment year 2017-18 and subsequent assessment years.

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