Budget 2020 was announced with quite a few surprises that paved the way for larger changes. By tweaking some laws here and there, the centre has altered the tax audit applicability for AY 2020-21.
While the actual news is confusing for a layman to understand, we are attempting, through this blog, to communicate the information to you as simply as possible.
Budget 2020: What changed in tax Audit?
The Budget 2020 has mirrored the change that happened back in Budget 2016. Back in that year, the turnover limit of Section 44AD was raised to INR 2 Crore from INR 1 Crore without changing any limit to turnover in Section 44AB. This created an anomaly where the higher turnover limit is enjoyed by an eligible assesse rather than the actual assessee. In simple terms, the ones who are eligible to file the income tax returns are going to enjoy higher turnover limit than the one who is filing the returns.
With the introduction of Budget 2020, more changes are introduced. With this introduction, the tax audit limited applicability for Ay 2020-21 has changed again. Another slab has been introduced, of INR 5 Crore. It states that a person with annual turnover of INR 5 Crore whose aggregate of all amounts received in and all payments made is not case for more than 5 percent of this annual turnover, than such payment doesn’t need to be mentioned in the tax audit.
Additionally, more changes were proposed for Section 44AB and they are as follows:
- Every person carrying a business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in the previous year;
- Provided that in the case of a person whose:
- Sum of all amounts received during sales, gross receipts or turnover, is in case, and that cash amount doesn’t exceed 5% of the annual turnover; and
- Sum of all amounts paid during expenditure, is in cash, and that cash amount doesn’t exceed 5% of the whole payment;
In case of such income/payment, the said income/payment taken in/given out in case is exempted from being entered in the tax audit.
Granted that what’s being written here is still a bit confusing. Nevertheless, if you want to file income tax online or need auditing services of any kind, we can help. Our experts understand the nuances of tax auditing laws better and they are more than happy to deliver you affordable solutions.