Section 44AB: As per the Income Tax Bare Act, 1961

Section 44AB deals with the audit of accounts of a certain category of persons carrying on a business or engaged in a profession. The class of taxpayers listed under this section compulsorily have to get their accounts audited by a Chartered Accountant. Here is the Section 44AB as per Income Tax Bare Act.

Section 44AB as per Income Tax Bare Act

Let’s understand the provision of section 44AB:-

EXTRACT OF Section 44AB – Audit of accounts of certain persons carrying on business or profession.

Audit of accounts of certain persons carrying on business or profession.
Every person,—(a) carrying on business shall, if his total sales, turnover, or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year.

Provided that in the case of a person whose—

(a) the aggregate of all amounts received including the amount received for sales, turnover, or gross receipts during the previous year, in cash, does not exceed five percent of the said amount; and

(b) the aggregate of all payments made including the amount incurred for expenditure, in cash, during the previous year does not exceed five percent of the said payment:

Provided further that for the purposes of this clause, the payment or receipt, as the case may be, by a cheque drawn on a bank or by a bank draft, which does not account payee, shall be deemed to be the payment or receipt, as the case may be, in cash,

this clause shall have effect as if for the words “one crore rupees”, the words “five crore rupees” had been substituted; or

(b) carrying on profession shall if his gross receipts in profession exceed fifty lakh rupees in any previous year, or

(c) carrying on the business shall if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or

(d) carrying on the profession shall if the profits and gains from the profession are deemed to be the profits and gains of such person under section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or

(e) carrying on the business shall if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,

get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed :

Provided 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:

Provided further that this section shall not apply to the person, who derives income of nature referred to in section 44B or section 44BBA, on and from the 1st day of April 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later :

Provided also that in a case where such person is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and furnishes by that date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this section.

Explanation. —For the purposes of this section,—(i) “accountant” shall have the same meaning as in the Explanation below sub-section (2) of section 288;(ii) “specified date”, in relation to the accounts of the assessee of the previous year relevant to an assessment year, means 11 [date one month prior to] the due date for furnishing the return of income under sub-section (1) of section 139.

Also Read- Section 44AB: Tax Audit Limit, Eligibility, Due Date, Penalty, Forms, FAQs etc.

Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. However, it does not constitute professional advice or a formal recommendation. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article.

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