INCOME TAX

BY CA. HARESH N. MEHTA

ANALYSIS OF NEW SECTION 44AD & SECTION 44AB APPLICABLE W. E. F. A. Y. 2011-12

1 RECENT AMENDMENTS TO SECTION 44AB:The present sections 44AD and 44AF are omitted w. e. f. A. Y. 2011-12. A new section 44AD had been inserted :1. The new section will be applicable to any b siness only if the followin! conditions are satisfied:a. "li!ible Assessee :- "li!ible assessee for this p rpose is an #ndi$id al% an &'F or a (artnership Firm )not bein! **(+ ,ote : A (artnership Firm is eli!ible b t **( is not eli!ible. -thers li.e ($t. *td.% ( blic *td.% /o-operati$e 0ocieties etc are not eli!ible. b. The assessee has not claimed ded ctions 1s. 10A% 10AA% 102% 102A% 30&& to 30442 in the rele$ant assessment year. c. "li!ible 2 siness :- The assessee sho ld be en!a!ed in any b siness e5cept the b siness of plyin!% hirin! or leasin! of !oods carria!es referred to in the section 44A". ,ote : -nly b siness is eli!ible not (rofession. Traders% 6holesalers% 4etailers% 7an fact rers 8 0er$ice #nd stries is co$ered. d. The total t rno$er 1!ross receipts1sales in the pre$io s year sho ld not e5ceed 4s. 90 la.h. 2. #f the abo$e conditions are satisfied% the income from the eli!ible b siness is estimated :3; of the !ross receipts or total t rno$er. <. The assessee optin! for scheme 1s. 44AD shall be e5empted from payment of ad$ance ta5 related to s ch b siness ,ote : 0ince assessee is not liable for payment of Ad$ance Ta5% #nterest 1s. 2<42 8 2<4/ is not le$iable while filin! #ncome Ta5 4et rn. 4. The assessee optin! for scheme 1s. 44AD shall be e5empted from maintenance of boo.s of acco nts related to s ch b siness 1s.44AA
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BY CA. HARESH N. MEHTA

=. /onse> ences of declarin! lower profit ? a. 4e> ired to !et boo.s of acco nts a dited 1s. 44A2. b. /omp lsory maintenance of 2oo.s of Acco nts 1s. 44AA ,otes :1. #n case assessee declarin! profit lower than 3; of T nro$er1@ross 4eceipts d e date for filin! of 4et rn will be <0th 0ept% since 2oo.s of Acco nts are re> ired to be a dited 1s. 44A2. 2. #f an assessee is not re> ired to file his #ncome Ta5 4et rn 1s. 1<A)1+% he is not re> ired to a dit his 2oo.s of Acco nts 1s. 44A2 e$en if he has declared profit below 3; of @ross T rno$er 1s. 44A2. An #ndi$id al1 &'F is not mandatorily re> ired to file his1its #ncome Ta5 4et rn if his1itBs income )witho t claimin! ded ction 1s. 10A% 102% 102A% 30/ T- 30'+ does not e5ceed the amo nt of basic slab. )which is 4s.1900001- for A. Y. 2011-12+. Th s #ndi$id al1&'F ha$in! no other income 8 t rno$er below 4s.20 lacs )19000013 C100+ will not be co$ered 1s.44AD. <. #ndi$id al1&'F declarin! profit :3; of 0ales1T rno$er1 @ross 4eceipt or more can file their #ncome Ta5 4et rn is ,ew #T4 -40 )s !am+. ( rpose seems to be that 0'@A7 4et rns will not be ta.en p for scr tiny assessment. 4. (enalty for ,on-maintenance of 2oo.s of Acco nts 1s. 2D1A is 4s.2=0001-. =. (enalty for fail re to a dit 2oo.s of Acco nts 1s. 44A2 or Fail re file A dit 4eport is 0.=; of 0ales1@ross T rno$er1 4eceipt )7a5im m is 4s.1%=0%0001- b t practically 0.=; of 4s.901- lacs is 4s.<00001-+. 9. 6hile calc latin! @ross t rno$er1 @ross 4eceipts limit 1s. 44A2% @ross T rno$er1 4eceipts of b siness co$ered 1s. 44AD 8 44A" shall be e5cl ded.
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INCOME TAX
Case Studies u/s. 44AD:NATURE OF BUSINESS STATUS

BY CA. HARESH N. MEHTA

GROSS NET PROFIT TURNOVER/ RECEIPTS 0S. )0 0s. 410000/LA23S 0s. )0 4a5&s 0s. 6)000/WHETHER LIABLE TO AUDIT U/S. 44AB No Since Net profit is more than 8% of Turnover. No since his total amount does not exceed the maximum amount not chargeable to tax Yes since his Net Profit is below deemed income prescribed u/s. 44AD Yes since his turnover is exceeding Rs. 60 lakhs not eligible u/s. 44AD

CI/IL INDI/ID1AL CONST01CTION CI/IL INDI/ID1AL CONST01CTION

CI/IL PA0TNE0S3IP CONST01CTION FI07

0s. )0 4a5&s

0s. 6)000/-

B1ILDIN8 7ATE0IAL S1PPLIE0

PA0TNE0S3IP FI07

0s.+0 4a5&s

0s. )60000/-

AN INDIVIDUAL HAVING FOLLOWING 3 PROPRIETORY BUSINESS :CI/IL 0S. 90/0s.2)0000/N . s#!c" N"$ Pr .#$ #s CONST01CTION LA23S % r" $&a! 6: . 8r ss T;r! v"r B1ILDIN8 0S. +0/0s. *00000/Y"s <"ca;s" T;r! v"r 7ATE0IAL LA23S #s "=c"",#!- 0s. *0 S1PPLIE0 4acs STONE 0s. 1)/- La5&s 0s. 100000/Y"s <"ca;s" N"$ Pr .#$ C01S3E0 #s 4"ss $&a! 6: . T;r! v"r

T&;s ass"ss"" #s r">;#r", $ -"$ acc ;!$s a;,#$", #! r"sp"c$ . B;#4,#!- 7a$"r#a4 s;pp4#"r <;s#!"ss & S$ !" Cr;s&"r B;s#!"ss
AN INDIVIDUAL HAVING FOLLOWING 3 PROPRIETORY BUSINESS :CI/IL 0S. 90/0s.2)0000/N . s#!c" N"$ Pr .#$ #s CONST01CTION LA23S % r" $&a! 6: . 8r ss T;r! v"r B1ILDIN8 0S. 20/0s. 160000/N . s#!c" N"$ Pr .#$ #s 7ATE0IAL LA23S % r" $&a! 6: . 8r ss S1PPLIE0 T;r! v"r STONE 0s. 9)/- La5&s 0s. 900000/N . s#!c" N"$ Pr .#$ #s C01S3E0 % r" $&a! 6: . 8r ss /var/www/apps/c !v"rs# !/$%p/scra$c&'4/211()*+4*., c Pa-" 9 . *

INCOME TAX

BY CA. HARESH N. MEHTA

T;r! v"r

Ev"! $& ;-& a--r"-a$" $;r! v"r . a44 $&" <;s#!"ss "=c"",s 0s. *0/- 4a5&s? Ass"ss"" #s ! $ 4#a<4" $ a;,#$ ;/s. 44AB #! r"sp"c$ . a!@ . $&" <;s#!"ss.

Section 44AB :POSITION UPTO A. Y. 201011 1. Persons caryying on POSITION W. E. F. A. Y. 2011-12 1. Limit is increased from 10 lacs to Rs. 15/- lacs

Profession is required to get accounts audited if gross

receipts from the Profession is exceeding Rs. 10/- Lacs 2. A Person caryying on 2. Limit is increased from 40 lacs to Rs. 60/- lacs a. The limit of Rs. 60 lacs must now be applied

business is required to get accounts audited if his total sales, turnover or gross

receipts, as the case may be , from the business exceeds Rs. 40/- Lacs 3. A Person caryying on business covered u/s. 44AE or 44AD or 44AF is

business wise.

b. If turnover, Sales, Gross Receipts of an individual eligible business does not exceed assessee Rs. 60 lacs and for

required to get accounts audited if he claims his income or profit lower than the deemed income

opts

presumptive scheme under section 44AD, no need to get

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INCOME TAX
prescribed respective though his under sections total the even

BY CA. HARESH N. MEHTA

accounts of that business audited u/s. 44AB The aggregating of

sales, c.

turnover or gross receipts as the case may be does not exceed Rs. 40 lacs

turnover/gross receipts/ sales from all businesses and

then applying the limit of Rs. 60/- lacs is relevant only to Companies, LLPs etc who are not eligible to opt for presumptive 44AD. d. If the assessee being taxation u/s.

Individual or HUF does not opt for section 44AD in

respect of any individual business but his total income exceeds taxable limit, audit is compulsory for that

business. e. If assessee being Partneship firm does not opt for section 44AD in respect of any

eligible business, audit is compulsory

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for

that

INCOME TAX

BY CA. HARESH N. MEHTA

business.

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