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Section 44AB Of Income -Tax Act

Section 44AB Of Income – Tax Act

Are you wishing to form a start-up or a small business?

No matter what, as per section 44AB of the income tax act. If you fall under a certain class of taxpayers then you are required to get your accounts audited from a chartered accountant. The report of the tax audit is to be submitted by the Chartered accountant.

In this blog, you will gain knowledge about Income tax audits under section 44AB of the Income Tax Act. Just before getting into further details about Section 44AB, let us understand the term “Audit”.

Google Dictionary’s meaning of the term “audit” suggests it is an official inspection of an organization’s accounts, typically by an independent body.

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What Is A Tax Audit?

There are numerous types of tax audits prescribed under different laws for both businesses and individuals.

For example,

•The company law requires a company audit, cost accounting law requires a cost audit, etc.

•The Income-tax Law requires the taxpayer to get an audit of the accounts of his business/profession.

What Are The Objectives Of The Tax Audit?

A regular audit of accounts of a business or a profession for tax purposes is essential to ensure that the books of account are properly maintained.

The chartered accountant conducting the tax audit is required to submit his findings, observations, etc., in the particular forms prescribed by the CBDT. It helps the tax department to keep a check on fraudulent practices. At the same time, reporting the audit in a format will assist the assessing officers in verifying the correctness of the audit report.

Who Is Required To Get His Accounts Audited?

As per Section 44AB, there are various categories of taxpayers with different threshold limits who are required to get a tax audit.

Here is the list of taxpayers who need to get the tax audit done:

1. A person who is doing business with total sales, turnover or gross receipts in business for the year exceeding Rs 1 crore.

2. A person who is doing the business and its profits and gains are considered as the profits and gains of that person under Section 44AE or Section 44BB or Section 44BBB of the Income-tax act and he claimed his income to be lower than the taxable limit prescribed for the profits and gains of his business in any previous year.

3. One who is doing business and its profits and gains are considered as the profits and gains of that person under Section 44AD of the Income-tax act and he claimed his income to be lower than the taxable limit prescribed for the profits and gains of his business but his income is more than the maximum limit exempted from paying income tax for any previous year.

4. This provision is not applicable if he is conducting business and furnishing all tax details as per the presumptive taxation scheme under Section 44AD and his total sales or turnover doesn’t exceed Rs 2 Crores.

Profession:

1. A person in a particular profession needs to get his account audited if the gross receipts in the profession exceed 25 lakhs in any previous year.

2. A person in a particular profession who is eligible for a presumptive taxation scheme under Section 44ADA, but he claims the profits and gains for such profession to be lower than the profit and gains computed as per the presumptive taxation scheme and his income exceeds the amount which is not chargeable to tax

NOTE: This provision does not apply to the person who derives income as per Section 44B and Section 44BBA, on and from the 1st of April, 1985.

If a person has already audited his accounts under any other law, then is it compulsory to get his accounts audited again to comply with Section 44AB?

As per Section 44AB, if a person has already audited his accounts under any other law, then he need not get his accounts audited to comply with the requirement of this section.

In this case, it is sufficient to report the details of the audit as required by the chartered accountant in the form prescribed under section 44AB, i.e., Form 3CA and Form 3CB.

What Are The Forms Used To Report The Tax Audit?

The tax audit report has to be submitted by the chartered accountant in a particular form prescribed by the Income-tax department.

Form 3CA:

If a person is carrying on a business or profession and has already audited his accounts under any other law other than Income-tax law.

Form 3CB:

If a person is carrying on a business or profession and is not required to get his accounts audited under any other law.

Form 3CD:

It is a detailed statement of particulars that has to be filled along either of the above-mentioned forms.

What Is The Due Date To Submit The Tax Audit Report?

A person covered by section 44AB should get his accounts audited and should obtain the audit report on or before the due date of filing of the return of income, e.g. on or before 30th Sept. of the relevant assessment year.

The tax audit report is to be electronically filed by the chartered accountant to the Income-tax Department. After filing the report by the chartered accountant, the taxpayer has to approve the report from his e-fling account with the Income-tax Department ).

What is the penalty for not getting the audited account?

If the taxpayer fails to submit the audit report, the Assessing Officer may impose a penalty according to Section 271B.

1. 5% of the total sales, turnover, or gross receipts or

2. 1,50,000, whichever is lower.

However, no penalty will be imposed if a valid reason is provided for such failure under Section 271B.

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Who	When	Part	Form
Every registered person under GST	Before movement of goods	Fill Part A	Form GST EWB-01
Registered person is consignor or consignee (mode of transport may be owned or hired) OR is a recipient of goods	Before movement of goods	Fill Part B	Form GST EWB-01
Registered person is consignor or consignee and goods are handed over to transporter of goods	Before movement of goods	Fill Part B	In Part B of FORM GST EWB-01, the registered must provide information related to the transporter.
Transporter of goods	Before movement of goods		Generate e-way bill on basis of information shared by the registered person in Part A of FORM GST EWB-01

Type of conveyance	Distance	Validity of EWB
Other than over-dimensional cargo	Less Than 200 Km	1 Day
For every additional 200 Kms or part thereof	additional 1 Day
For Over dimensional cargo	Less Than 20 Km	1 Day
For every additional 20 Kms or part thereof	additional 1 Day

TIN/VAT	TAN	PAN	DSC	DIN
TIN represents the Tax Identification Number.TIN was earlier known as VAT.	TAN represents Tax Deduction and Collection Account Number.	PAN represents Permanent Account Number	DSC represents Digital Signature Certificate	DIN represents Director Identification Number.
Unmistakable states have various regulations that apply to TIN.	The Law appropriate to TAN is under segment 203A of the Income Tax Act.	The law appropriate to PAN is under segment 139A of the Income Tax Act.	According to the Companies Act, 2013.	The Law appropriate for DIN is under sections 153 and 154 of the Companies Act.
Endeavors mentioning VAT enrollment, like exporters, makers, brokers, and vendors of items and administrations, should enlist for a TIN. TIN is currently replaced with GSTIN.	TAN is a ten-digit alphanumeric number given by the Indian Income Tax Department to people who are committed to deducting or gathering charges on installments made under the Indian Income Tax Act, 1961.	PAN is a 10-digit ID number expected by the Income Tax Department for anyone who goes through with monetary exchanges or makes good on charges.	Digital signatures are expected for specific records and exchanges to be documented on the web.	DIN is a special distinguishing proof number held for the organization’s current or impending chiefs. It contains individual data about them.
TIN is given by the Commercial Tax Department of the particular state.	TAN is given by the Income Tax Department.	PAN is given by the Income Tax Department.	It is given by any authorized confirming power, according to area 24 of the Income Tax Act, 2000.	DIN is distributed by the Central Government.

Taxable Income Range IN RS.	Tax Rate Before Budget 2020 (Old Regime)	Tax Rate After Budget 2020(New Regime)
0- 2.5 Lakh	Exempted	Exempted
2.5- 5 Lakh	5%	5%
5- 7.5 Lakh	20%	10%
7.5-10 Lakh	20%	15%
10- 12.5 Lakh	30%	20%
12.5- 15 Lakh	30%	25%
Above 15 Lakh	30%	30%

Income	Tax In Old Regime	The Tax In Old Regime	Tax In New Regime	Difference
	(Without Deduction)	(With Deduction)
14 Lakh	242000	179400	169000	10400
15 Lakh	273000	210600	195000	15600

Exemption Category	Maximum Deduction Amount
Standard Deduction	5000
Investment Under Section 80 C	150000
Medical Insurance Premium	25000
NPS Deduction	50000
Saving Bank Interest	10000
Housing Loan Interest	200000
Total	485000

Category	New Tax Regime	Old Tax Regime
Income	1500000	1500000
Deductions	0	485000
Taxable Income	1500000	1015000
Income Tax	188000	117000
Cess	7500	4680
Tax Liability	195500	121680

Category: Tax

Section 44AB Of Income – Tax Act

Are you wishing to form a start-up or a small business?

What Is A Tax Audit?

What Are The Objectives Of The Tax Audit?

Who Is Required To Get His Accounts Audited?

Profession:

What Are The Forms Used To Report The Tax Audit?

What Is The Due Date To Submit The Tax Audit Report?

What Are The Capital Gain Tax Exemption

Capital Gain

How Are Capital Gains Taxed

Capital Gain Exemptions

Exemptions Under Short Term Capital Gains

Exemptions under future Capital Gains

Other Exemptions:

What Is The Max Agriculture Income Exempt From Income Tax

What is agriculture income?

How is agriculture income treated for tax purposes?

Do you know which agriculture income is exempt under which section?

For people who satisfy the above-mentioned conditions, the agriculture tax liability is going to be computed within the following steps-

Benefit u/s 54 B

What Are The samples of Agricultural Income?

Most Commonly Asked Questions

Treatment for tax purposes

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Who Can File The ITR-4 Sugam Form?

Most Recent Update In ITR-4 Form

Who Cannot File Document ITR-4?

How One Can File ITR-4?

Offline Procedure

Online Procedure

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All About E-Way Bill?

When Should E-Way Bill Be issued?

Who should Generate An E-Way Bill?

Cases When E-Way Bill Is Not Required

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Validity Of E-Way Bill

Documents Or Details Required To Generate E-Way Bill

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Permanent Alimony:

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Lump-Sum Alimony:

Taxability of Alimony

Alimony Paid Through Assets Other Than Cash

What Is The Difference Between TIN/TAN/VAT/PAN/DSC And DIN?

Taxpayer Identification Number/ Value Added Tax-TIN/VAT

Tax Deducted and Collection Account Number-TAN

Permanent Account Number-PAN

Digital Signature Certificates-DSC

Director Identification Number-DIN

A Detailed Comparison Between TIN/TAN/VAT/PAN/DSC And DIN

What Is Section 44ADA Of The Income Tax Act – Presumptive Taxation Scheme

What Makes Section 44ADA Of The Income Tax Act Unique? Let’s Have A Look.

Who Are The People, Covered By Section 44ADA?

Is There A List Of Professionals Who Are Covered By Section 44ADA?

The Extract of Section 44ADA of the Income Tax Act

How Do You Figure Out Your Taxable Income If You’re Using The 44ADA Presumptive Taxation Scheme?

Payment Of Advance Tax For Specified Professions Under Section 44ADA:

Maintenance Of Books Of Accounts As Per Section 44ADA:

Accounts Must Be Audited And Books Must Be Kept Up To Date Under The Following Conditions:

How To Effectively Save Tax With A Salary Of 15 Lacs. Per Annum

New income tax slabs in budget 2020 (for FY 2020-21)

On a salary of RS. 15 lakh per annum, how can you save tax?

The following example will help you understand

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