Hi, I have to report following in my ITR : 1. Salary ( More than 2.5 Lac ) 2. STCG 3. Intraday Trading Activity ( Loss = 60000, T/O = 2.2 Lac ) I know the fully compliant way is to use ITR 3 with Tax Audit. I want to avoid tax audit in any case and I have been suggested to pay taxes on 6% of T/O using ITR 3 under section 44AD. When I was researching online, I came across two TaxGuru articles : https://taxguru.in/income-tax/tax-audit-case-section-44ad-applicable-net-profit-8-6.html https://taxguru.in/income-tax/tax-audit-turnover-1-crore-net-profit-8.html As per those articles, The Amendments in Finance Act, 2016 give us opportunity to carry forward losses without Tax audit if T/O is less than 1 Cr and assessee has not used 44AD in the past ( Which is true in my case ) I am here to take your views on those articles. Is it possible that I can carry forward losses without any audit ? If yes, Can i use 'No Account Case' to do so ? If No, Would you suggest me going 44AD way ( Paying tax on 6% of T/O ) to avoid Tax audit ?
Dear Sir,
-It is advisable to don't declare and carry forward the speculation loss without tax audit. I don't know the reliability of such articles but there will be chances of notice of defective return or otherwise without tax audit.
- It is better to declare 6% income of turnover.
- Use ITR-3
Thanks
Hi,
The view mentioned in the article seems to be very logical.
In my opinion, if you have not filed return under section 44AD in earlier 5 years, then you can continue to show losses in business profession without need of any audit.
However, you can't choose no accounts case. You will have to maintain books of accounts.
as per 44AD if your turnover is less then 2 cr and your profit is less then 6%/8% then you have to Audit your books of accounts if your gross total income is more then exemption limit (Rs. 2,50,000)
in your case you can show intraday business transactions under STCG and can avoid Tax audit compliance
because in shares trading nature of income depends on intention while purchasing.
Hi,
You can show intraday business transactions under STCG and there is no need for you to get the Tax audit done. You can carry forward the losses without the tax audit.
Regards,
Nikhil.
Dear Sir,
Intraday losses are always speculation loss and not capital loss. Please don't be misguided.
Thanks
Dear Sir,
I think there is interpretation issue of section 44AD(4) and 44AD(5). According to me if eligible assessee defaults in six years then he will not be eligible for the scheme for next five years and he has to maintain books of accounts and get them audited compulsory if his income exceeds the threshold. In other words he is penalised to maintain books of accounts and for audit for defaulting the liberal scheme of presumptive taxation.
In your case it is the first time you will avail the benefit of the scheme so it should not be applicable to you. It is applicable for defaulters of section 44AD.
Thanks
Hi,
Hope you are doing well !
I have read the articles. They are quite useful.
Yes, you can carry forward losses without any audit.
No, you can not use 'No Account Case''. You will have to maintain books of accounts.
Thanks & Regards,
Payal Chhajed
Hello Vivek Sir, Abhishek Sir and Payal Mam After going through those articles and getting confirmation from you, I have made my mind carry forwarding losses without any Tax Audit. I was going through the bare acts for 44AA and I found out that the conditions for mandatory book keeping and coming under the purview of Tax Audit are one and the same : 1. Applicability of Sub-Section (4) section 44AD : As Vivek Sir mentioned and those articles iterates, Sub-Section (4) of 44AD is not applicable to me as I am filing my Business Income first time ! ( It seems they have altogether removed the clause of mandatory book keeping where assessee declares profit less than 6%/8% of his turnover from 44AA ) 2. In my case, I am well within the T/O ( Less than 25,00,000 ) and Profit ( Less than 2,50,000 ) criteria of mandatory book keeping. I also tried playing around with ITR 3 Java Utility, filed losses in 'No Account case' ( Used -ve sign ) and was able to successfully generate XML without any errors. I still feel, I can report losses in 'No Account Case' as well. I request you all to please go through 44AA and Suggest me if I should use 'No Account Case'. Or am i missing here something ? Am i liable to keep books under any other Sections ? Any suggestions here would be immensely helpful. @ Lalit Sir & Nikhil Sir, I feel I can not file Speculative losses under 'Schedule CG' specially when I have only two delivery based transactions against 100s of Intraday transaction !
Dear Sir,
Section 44AD starts with "Notwithstanding anything to the contrary contained in Sections 28 to 43C" i.e. it does not include section 44AA which means even assessee's availing benefit of scheme of presumptive taxation u/s 44AD/44ADA has to maintain books of accounts compulsory if they meet the criteria of section 44AA.
Now coming to Section 44AD which in itself speaks that if assessee declares 6%/8% income of total turnover then he is exempted from maintaining books of accounts. Audit will be done only when books of accounts will be prepared.
In your case, it is advisable to show 6%/8% income of your turnover inspite of the losses to avail the benefit.
Thanks
Dear Sir,
The benefit by showing income under presumptive basis is the assessee is not required to maintain books of account neither he is required to get account audited.
Hence, you are not liable to keep books under any other sections.
Thanks & Regards,
Payal Chhajed
Hi
The view points in the article are absolutely correct. You need not require audit for carry forward of losses as you are not covered under sub section 4.
Also, books of accounts need not to be maintained. The simultaneous conditions are applicable for defaulters under sub section 4. However, your case is now out of 44AD and for maintenance of books of accounts, section 44AA needs to be referred. According to 44AA, you need not maintain books of accounts as you have losses from business.
However, you will have to give all such details in ITR regarding how the losses are calculated.
Hi,
No accounts case means that you are opting for either section 44AD or 44ADA. If you are opting for that, the form itself will not allow you to put income less than 6%.
Hence, you should file the itr under normal provisions.
You can use ITR 3 without audit and carry over the Speculative loss if your total t/o is <2.50l no need to maintain books as per 44AA speculative loss be shown under speculative income or loss in BP shedule