Question

In: Accounting

Which Party Engages the Audit Firm?

Which Party Engages the Audit Firm?

Solutions

Expert Solution

Ans : As per section 44AB, following persons are compulsorily required to get their accounts audited :

  • A person carrying on business, if his total sales, turnover or gross receipts (as the case may be) in business for the year exceed or exceeds Rs. 1 crore. This provision is​ not applicable to the person, who opts for presumptive taxation scheme under section 44AD​ and his total sales or turnover does not exceeds Rs. 2 crores.
  • A person carrying on profession, if his gross receipts in profession for the year exceed Rs. 50 lakhs.
  • An assessee who declaus profit for any previous year in accordance with section 44AD and he decreases profit for any of one 5 assessment year rufuant to the previous year succeding such previous year lower than the profit compused as per section 44AD and his income exceeds the amount which is not chargeable to tax.
  • If an eligible assessee opts out of the presumptive taxation scheme, within the oforesaid period, he cannot choose to revert back to the presumptive taxation scheme for a period of five assessment years thereafter.

(*) For provisions of section 44AD​ refer tutorial on “Tax on presumptive basis in case of certain eligible business”.

  • A person who is eligible to opt for the presumptive taxation scheme of section 44ADA (*) but he claims the profits or 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.
  • ​A This provision is not applicable to the person, who opts for presumptive taxation scheme under section 44AD​ and his total sales or turnover does not exceeds Rs. 2 crores.
  • For provision of section 44ADA​, refer tutorial on “Tax on presumptive basis in case of certain eligible business”

  • A person who is eligible to opt for the presumptive taxation scheme of sections 44AE (*) but he claims the profits or gains for such business to be lower than the profits and gains computed as per the presumptive taxation scheme of sections 44AE.
  • For provisions of sections 44AE refer tutorial on “Tax on presumptive basis in case of certain eligible business”.

  • A person who is eligible to opt for the taxation scheme prescribed under section 44BB (*) or section 44BBB (*) but he claims the profits or gains for such business to be lower than the profits and gains computed as per the taxation scheme of these sections.
  • Section 44BB is applicable to non-resident taxpayers engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire basis to be used in exploration of mineral oils. section 44BBB​ is applicable to foreign companies engaged in the business of civil construction or erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project.


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