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44 AD AUDIT
As per newly inserted sub section 5 of section 44AD, for the Assessment year 2017-18, even if a person (whose turnover is below S77; 2 crore) is offering lower presumptive tax rate than 8%, wont he be subject to Tax Audit? Because now the criteria for Tax audit under section 44AD is given under sub section 5 i,e an assesee should have availed 44AD in the AY 2017-18 and subsequent five years.
Presuming that an assessee for the AY 2017-18, has an annual turnover of S77; 1 crore and his net profit is S77; 1 lakh only (lower than 8%) . And he does not want to avail 44AD. According to the newly inserted subsections 4 and 5, he will not be subject to Tax Audit. Because tax audit will arise only if you avail 44AD in any year and thereafter if you don’t avail that benefit in any of the next five years whereas until the AY 2016-17 this is subject to Tax audit simply because the profit is lower than 8%.