Applicability of tax audit to assessee carrying out business and profession - Professionals - Taxation - TIK Share
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Applicability of tax audit to assessee carrying out business and profession


Ankit Sharma

2015-07-02

As per section 44AB of Income tax act 1961, an assessee carrying on business is required to get his accounts audited if his turnover/sales in previous year was exceeding Rs 1 crore, or if his gross receipts from profession was exceeding Rs 25 Lac.

What if assessee is carrying on business as well as profession, what would be the limit applicable to him? Is it Rs 1 crore or Rs25 Lac?

As per guidance note issued by ICAI on tax audit, if assessee is engaged in business as well as in profession, he is required to get his professional as well business books of accounts audited if turnover of the business or gross receipt from profession is exceeding prescribed limit.

Example-

1. Mr X is engaged in business as well as in profession-

Professional receipt – 30Lac

Business turnover – 60 Lac

Answer – MrX is required to get his professional as well as business accounts audited as his gross receipts from profession is exceeding Rs 25 Lac.

2. Mr X is engaged in business as well as in profession-

Professional receipt – 20Lac

Business turnover – 120 Lac

Answer – Mr X is required to get his professional as well as business accounts audited as his business turnover is exceeding Rs 100 Lac.

3. Mr X is engaged in business as well as in profession-

Professional receipt – 20Lac

Business turnover – 90 Lac

Answer – Mr X is not required to get  professional as well as business accounts audited as his business turnover and professional receipts are not exceeding prescribed limit.

 

Rahul Rai

2015-07-02

This is great information. I was not aware of these provisions.

What if I have 1 profession and 2 business. Do i need to club the turnover of both business?

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Ankit Sharma

2015-07-03

Yes, you have to club turnover of both the business.  As per section 44AB an assessee engaged in business is required to get his accounts audited if turnover is exceeding Rs 1 crore, So, if an individual assessee is having more than one business, turnover of all the business are to be clubbed for determining applicability of tax audit. However, turnover of the business which are covered under presumptive taxation scheme under section 44AD, 44AE etc should not be included.

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