Clause - 020 - Amendment of section 44AB.

THE FINANCE BILL, 2017

Clause 20 of the Bill seeks to amend section 44AB of the Income-tax Act relating to audit of accounts of certain persons carrying on business or profession.

Section 44AB, inter alia, provides that every person carrying on business is required to get his accounts audited before a specified date, if the total sales, turn over or gross receipts in a previous year, as the case may be, exceed or exceeds one crore rupees.

It is proposed to amend the said section so as to insert a new proviso to provide that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.

 

Audit threshold increase for presumptive taxation reduces audit applicability where turnover does not exceed prescribed limit. A proviso to the tax audit requirement exempts persons who declare profits under the presumptive taxation scheme and whose total sales, turnover or gross receipts do not exceed the revised turnover ceiling, thereby narrowing the class required to obtain an audit when they comply with sub section (1) of the presumptive taxation provision. The amendment is effective from 1 April 2017 for the relevant assessment year and subsequent years.