Is Section 44AD compulsory if Income less than 8%?

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  1. Samkit Mepani

    Samkit Mepani New Member

    I have met some tax experts who has given an opinion that section 44AD is compulsory. In case an eligible assessee is carrying on an eligible business and declare less than 8 % and his gross total income exceeds basic exemption limit than section 44AD is compulsory. This will apply even if the assessee does not want to go for presumptive basis taxes and ready to maintain all the books of accounts. In that case does assessee requires to go for audit? And section 44AD is compulosry for assessee?
  2. ZED

    ZED Well-Known Member

    If this is a first time case, then no issues. You may decide to not to opt S.44AD ,but audit may be required due to S.44AB if once the profit was claimed u/s 44AD.
    That being said, what you heard would be correct if 44AD was claimed in any previous year.

    S.44AB (Cases in which audit is required)
    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 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,

    When audit is required as per S.44AD?
    44AD(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) 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 undersection 44AB.
    Samkit Mepani likes this.
  3. sai charan 1997

    sai charan 1997 New Member

    no nooo...actually sewction 44AD is an option to the asssesse he can opt this or not at his will
    Samkit Mepani likes this.
  4. ZED

    ZED Well-Known Member

    But if 44AD is claimed in any previous year and if for the current year, the profit declared is less than 8% then notice does come.
    Once you are caught in S.44AD then audit becomes a compulsion (unless you declare higher profit) I am quite sure of it.
    Samkit Mepani likes this.
  5. sai charan 1997

    sai charan 1997 New Member

    yes i agree with ZED...
    ZED likes this.
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