Are You Covered Under Tax Audit

[canikhil]

Will audit be required if salary is 4.5 lakhs, turnover in FNO (I am assuming this is profit/loss only and not the total value) is less than 1 Cr, losses 1.5 lakhs?

yes my friend. It will be...

 

[jain.er]

Will audit be required if salary is 4.5 lakhs, turnover in FNO (I am assuming this is profit/loss only and not the total value) is less than 1 Cr, losses 1.5 lakhs?

If u want to avoid audit pay tax on the notional profit of 8% of turnover

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[Happy_Singh]

If u want to avoid audit pay tax on the notional profit of 8% of turnover

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The proposed cure is more dangerous (costly) than the disease . . .

With audit done he can carry forward loses of 1.5 L for 8 years i.e.
Tax savings benefit of about Rs 50,000/- from F&O Profits of 1.5 L in next 8 years

instead you are advising him to pay taxes on turnover of this year
assuming the TO is 50L that will be fake income of 4L i.e taxes in tune of 1.2 L

All that just to avoid doing an Audit (costs 10K)

Even if the TO is as low as 5 L, the presumptive tax to be paid will be more than the cost of audit.

My friend you seem to have an unreasonable fear of getting an audit done ???

Cheers

Happy

 

[oi trader boi]

Tax audit cost is 20k in my city..more the work,more the fees.But the basic fees is 20k.

 

[canikhil]

Tax audit cost is 20k in my city..more the work,more the fees.But the basic fees is 20k.

which city are you in?

 

[canikhil]

If u want to avoid audit pay tax on the notional profit of 8% of turnover

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Please note that effective FY 2016-17, if you take the 44AD option in one year, you cannot change it for next five years. So if you pay 8% this year, be ready to do that for next five years too.

 

[LOVEENAJYOTHI]

Please note that effective FY 2016-17, if you take the 44AD option in one year, you cannot change it for next five years. So if you pay 8% this year, be ready to do that for next five years too.

Plz Elaborate ,
coz it sure sounds unconstitutional.
challenged yet ? any case laws in favor of assessee ?

Thank u n Rgrds

 

[canikhil]

Plz Elaborate ,
coz it sure sounds unconstitutional.
challenged yet ? any case laws in favor of assessee ?

Thank u n Rgrds

this is the latest amendment applicable with effect from FY 2016-17. Actually it makes sense. Most of the assesses are changing there position every year. When there are losses, they start maintaining books ...when there are gains they go under 44AD...that is against the basic accounting concepts.

 

[TraderRavi]

Well the annual tax return season is just about to start and its the right time for you to evaluate whether you are supposed to anything more than just filing your tax returns.

This posts attempts to cover the issue of applicability of tax audit under various circumstances.

Till a few years ago, applicability of tax audit was a simple issue: If your turnover crosses a particular limit, you were required to get your accounts audited. However, since the introduction of refurbished Section 44AD, the applicability of audit has become a cumbersome issue.

So to make it easier for you all to know whether tax audit is applicable to you or not, I have shared below a few simple examples. (these examples have been shared at an earlier discussion in this forum too)

Case 1.

Turnover : Below Rs 1 cr
Gains/Loss from Business: 240000
Salary Income: No
any other income: Nil

Audit not required as condition of income exceeding maximum exemption limit not fulfilled

Case 2

Turnover: below Rs 1 cr
Gains: Rs 50000 (assumed)
Salary: Rs 250000

Audit required as condition of income exceeding maximum exemption limit and profit less than 8% fulfilled

Case 3

Turnover: Below Rs 1cr:
losses: 5 lakhs (assumed)
Interest Income: Rs 5 lakhs

Audit not required as losses will get set off against Interest income resulting in maximum income not exceeding maximum exempted limit.

In the above case, had the interest income exceeded Rs 7.5 lakhs, the audit would have become applicable.

Case 4

Turnover: Below Rs 1 cr

losses 5 lakhs (assumed)

Interest Income: Rs 2.5 lakhs,

Salary: Rs 3 lakhs

Audit required as only Rs 2.5 lakhs losses are set off against interest and remaining losses are to be carried forward (set off against salary not allowed). So income exceeds exempted limit.

Case 5

Turnover: Below Rs 1 cr

Speculative Losses: 2 lakhs

Interest Income : Rs 2.6 lakhs,

Salary: Ni

Audit required as speculative losses cannot be set off against interest income and both the conditions : income exceeding basic exemption limit and profit less than 8% are satisfied.

Case 6:

Turnover : Above Rs 1 cr. Don't bother. Audit is compulsory.

Kindly note that in the above examples it has been assumed there are no deductions available under section 80C, 80D etc.

Regards

Nikhil Kaushik

very nicely explained.
lets see another case,

A) Other business income 1.80 lakh
B) FNO turnover 10 lakh
C) FNO income 90,000 (> 8% of turnover)

total income 2.60 lakh but as FNO profit greater then 8% , so audit not necessary ?
as income is marginally above 2.50 lakh so after 10,000 deposit in PPF , there may be no taxable income , correct ?

 

[travi]

After FY16-17, the Turnover limit has been raised to 2 Cr.