ITR3 Audit

superman

Well-Known Member
#1
Hello Fellow Traders,

I am having close to 3% profit over my F&O turnover . I am wondering whether to show it 6% and not undergo audit or go through full audit,, I am not even sure how much the audit costs in Bangalore (Never got a good answer in google)

Can anyone please help me in my dilemma,, Whats the normal costs of CA for tax audit . I will prepare all books by myself.. And I think if we go for audit we can show all our business expenses like electricity bill etc which might save us some money,, Anyone doing those ? Please let us share our thoughts about this dreaded audit process and help the fellow traders
 
#2
Hello Fellow Traders,

I am having close to 3% profit over my F&O turnover . I am wondering whether to show it 6% and not undergo audit or go through full audit,, I am not even sure how much the audit costs in Bangalore (Never got a good answer in google)

Can anyone please help me in my dilemma,, Whats the normal costs of CA for tax audit . I will prepare all books by myself.. And I think if we go for audit we can show all our business expenses like electricity bill etc which might save us some money,, Anyone doing those ? Please let us share our thoughts about this dreaded audit process and help the fellow traders
If you decide to go for audit,you can deduct expenses such as electricity bill ( portion which is used for trading out of total household electricity bill) ,data subscriptions,internet charges ,depreciation on computers and laptops etc.Audit should cost between Rs10,000 to 15000 if you write the accounts books yourself.You can use Tally software for accounts writing as CAs also use the same software.

For audit cases one can file the IT returns till Sept end.

Smart_trade
 

VJAY

Well-Known Member
#3
Hello Fellow Traders,

I am having close to 3% profit over my F&O turnover . I am wondering whether to show it 6% and not undergo audit or go through full audit,, I am not even sure how much the audit costs in Bangalore (Never got a good answer in google)

Can anyone please help me in my dilemma,, Whats the normal costs of CA for tax audit . I will prepare all books by myself.. And I think if we go for audit we can show all our business expenses like electricity bill etc which might save us some money,, Anyone doing those ? Please let us share our thoughts about this dreaded audit process and help the fellow traders
Mr.Nikhil CA is our member i think he is from banglore (not sure) you can get help from him too if he is of your locality..
http://www.traderji.com/community/members/canikhil.270652/
 

canikhil

Well-Known Member
#5
Thanks for the response guys , 10K to 15K is too much for me and to prepare the books in the format required may be cumbersome. So for this year atleast I will show 6% profits and pay extra tax .
Almost done with my ITR3. In case someone is interested to see the sections I have filed and take an example , please check below post http://www.traderji.com/community/t...-and-i-would-get-it-solved.14176/post-1296048
I am generally against doing the audits, if it is legally avoidable.

But here are the things you need to account for before making a decision:

1. Once you choose for presumptive taxation, you gotta stick to this for next 5 years. This means that it doesn't matter whether you earn losses or gains, you still need to show at least 6 % profit every year on the turnover;

2. The issue of cost of audit v/s cost of taxes need to be taken care of. At 30% tax rate, presumptive taxation helps only where the difference between actual profit and presumptive profit is less than 40-50K. If your actual profit is 1 lakh and presumptive profit is 2 lakhs, then the cost of taxes will exceed the cost of audit.
 

superman

Well-Known Member
#6
I am generally against doing the audits, if it is legally avoidable.

But here are the things you need to account for before making a decision:

1. Once you choose for presumptive taxation, you gotta stick to this for next 5 years. This means that it doesn't matter whether you earn losses or gains, you still need to show at least 6 % profit every year on the turnover;

2. The issue of cost of audit v/s cost of taxes need to be taken care of. At 30% tax rate, presumptive taxation helps only where the difference between actual profit and presumptive profit is less than 40-50K. If your actual profit is 1 lakh and presumptive profit is 2 lakhs, then the cost of taxes will exceed the cost of audit.
Thanks for the reply Nikhil

I have doubts on the presumptive taxation, Are you saying if we dont fill the detailed P/L and Balance sheet and select No to all audits, its presumptive income and we need to stick to this same process 5 years ?So next year If I make enough profit or my turnover exceeds , I cannot go for audits and maintain books?
 

LOVEENAJYOTHI

Well-Known Member
#7
Once you choose for presumptive taxation, you gotta stick to this for next 5 years. This means that it doesn't matter whether you earn losses or gains, you still need to show at least 6 % profit every year on the turnover;
Hasn't yet anyone challenged the constitutional validity of this illogical , draconic provision ?
Ironically, the very reason for introducing the presumtive taxation was to make the taxation proceedings user-friendly.
 
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canikhil

Well-Known Member
#8
Hasn't yet anyone challenged the constitutional validity of this illogical , draconic provision ?
Ironically, the very reason for introducing the presumtive taxation was to make the taxation proceedings user-friendly.
this is not illogical. What was happening was that people will go for presumptive taxation in the year with higher profits and then revert to normal accounting and audit in the year of losses. This itself was a misuse by taxpayers of the government's intent to offer simplified taxation.
 

LOVEENAJYOTHI

Well-Known Member
#9
this is not illogical. What was happening was that people will go for presumptive taxation in the year with higher profits and then revert to normal accounting and audit in the year of losses. This itself was a misuse by taxpayers of the government's intent to offer simplified taxation.
Flimsy cause for a such a clause.
 

canikhil

Well-Known Member
#10
whether it is flimsy or not is an opinion Loveenjyothi ji. Accounting requires consistency. People tried to use a loophole. So government fixed it. thats all it is.
 

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