Please solve the following query

If I opt out of presumptive taxation and show profit below 6% or 8% of turnover, am I liable to get accounts audited?

If I opt out of presumptive taxation and show total income below Rs 2,50,000, am I liable to get accounts audited?

If I have not opted for presumptive taxation till last financial year, can I shown profit percentage below 8% or 6% of turnover without conducting audit?

Reply

As per sub section (4) of section 44AD where an assessee declares profit under presumptive assessment (44AD) in a year he shall liable to declare profit for all five assessment year succeeding such previous year. And if he opts out from the scheme of presumptive assessment during those five years he shall not be eligible to claim the benefit of presumptive assessment for five assessment years onward.

And further as per sub section (5) of Section 44AD, the assessee who opts out from presumptive assessment and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.

Therefore, if assessee opts out from presumptive assessment and total income of assessee is exceeding the maximum amount which is not chargeable to tax (i.e. 2,50,000) audit is compulsory, otherwise not.

In 1st case audit is compulsory, provided total income is more than Rs. 2,50,000.

In 2nd case audit is not compulsory.

In 3rd case audit is become compulsory if turnover of the assessee is more than 1 crore.