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What is Public Limited Company?
Characteristics of Public Limited Company Directors As per the provisions of the Companies Act, 2013 to start a public limited company, a minimum of 3 directors are required and there is no restriction on the maximum number of directors. Limited Liability The liability of each shareholder is limited. In simple words, a shareholder of a public limited company isn’t personally responsible for any loss or debts of the company for any amount greater than the amount invested by them; contrary to partnerships and sole proprietorships, where the partners and business owners are jointly and severally liable for the debts of the business. However, this characteristic of a public limited company does not offer immunity to the shareholders. The shareholders will be held responsible for their own illegal actions. Paid up capital A public limited company is required to have a minimum paid-up capital of Rs 5 lakh or such higher amount as prescribed under the act. Prospectus A prospectus is a comprehensive statement of the affairs of the company issued by a public limited company for its public and there is a requirement under the Act for public limited companies to issue a prospectus. However, there are no such provisions for Private Limited Companies. This is because private limited companies cannot invite the public to subscribe for their shares. Name It is a compulsory requirement under the Companies Act, 2013 for all the public companies to add the word ‘limited’ after their name. Advantages of Public limited companies Following are the advantages of forming a public limited company: More capital Shares are offered to the general public at large i.e. anyone can invest in a public limited company. Hence, improves capital of the company. More attention Being listed on a stock market ensures that mutual funds, hedge funds and other traders take note of business of the company. This may result in better business opportunities for the Public Limited Company. Spreading risk Since the shares are sold to the public at large the unsystematic risk of the market is spread out. Growth and expansion opportunities Due to less risk, there is a perfect opportunity for growing and expanding the business by investing in new projects from the money raised through shares. Requirements/Process for registration of Public Limited Companies There are various rules and regulations prescribed under the companies act, 2013 for the formation of a public limited company. Here is what you should keep in mind when registering a public limited company: Minimum 7 shareholders are required to form a public limited company Minimum of 3 directors is required to form a public limited company The minimum share capital of Rs. 5 lakhs is required Digital signature certificate (DSC) of one of the directors is needed while submitting self-attested copies of identity and address proof Directors of the proposed company will need a DIN An application is required to be made for the selection of the name of the company An application comprising the main object clause of the company is to be made. This object clause will define what a company will pursue after its incorporation Submission of the application to ROC along with the required documents like MOA, AOA, duly filled Form DIR – 12, Form INC – 7 and Form INC – 22 is needed Payment of the prescribed registration fees to the ROC is required After obtaining an approval from the ROC, the company should apply for the ‘certificate of business commencement.’
What is a One Person Company?
OPC FORMATION One Person Company (OPC) is a type of Company under the Companies Act, 2013. OPC is a company that has only one person as to its member and another person as their nominee. It can also be said that an OPC is a blend of Proprietorship concern and a Company. Features of OPC: (What are key features of an OPC?) Sole member: There can be only one member i.e. shareholder in an OPC. Nominee of the sole member: It is mandatory to appoint a person as a nominee for the sole member. A minor i.e. a person less than 18 years of age cannot be a member or even a nominee in an OPC. Minimum directors: An OPC can be set up with just one director, however, there can be a maximum of 15 directors. The sole member can also become a director of the OPC. No minimum capital requirement: There is no minimum capital requirement to set up an OPC. Hence, the initial capital of the OPC can be as per your requirements. Exemptions under Companies Act: To ease management and to promote OPC’s, under Companies Act, 2013, there are various exemptions for an OPC. Board meetings: It is mandatory to hold one board meeting in each half of a calendar year. Also, the gap between two board meetings should not be less than 90 days. This is not applicable to OPC’s where there is only one director Separate legal entity: Even though there is only one member in an OPC, still the OPC has a separate legal entity just like a private or a public company. Restrictions on type and business: An OPC cannot be converted or formed as a Section 8/not-for-profit company. Also, an OPC cannot carry out Non-Banking Financial Investment activities.Due to its constitutional structure an OPC enjoys various benefits such as: Limited liability: Instead of being a sole proprietorship concern whose liability is unlimited, the single person can set up an OPC which has limited liability which is to the extent of shares held by them on the OPC. A proprietor’s personal assets can be attached to their business for recovery of losses, but as OPC is a separate entity, the shareholders liability is limited to his/her share value. Fewer compliances: As compared to a Private or a Public company, an OPC has to fulfill fewer compliances. Cost effective: Due to few compliances’ costs such as government fees on form filing, stamp duty on the same, documentation costs are reasonably less as compared to a private or a public company. Controlling rights: As there is only one shareholder or member, the controlling rights are entirely with the sole shareholder. Also, the sole shareholder can be the sole director of the OPC, which gives additional controlling rights. For example as there is only one shareholder he alone can take decision and if he/she is also the director then this will help in getting dual approval. Quick decisions: As there is only one shareholder and if he/she is appointed as director, this will take care of the compliance of minimum director’s requirement, and will help in taking quick decisions, ease of management of the business. List of information required to set up an OPC: (Which information should be kept ready while setting up an OPC?) Proposed name of the Company. Complete postal address of the company. Initial capital of the company. List of activities the company will be engaged in. Name of the sole shareholder. Complete postal address of the sole shareholder. Name of the nominee for the sole shareholder. Complete postal address of the nominee for the sole shareholder. Name of the director. Complete postal address of the director. List of documents required to set up an OPC: (Which documents should be kept ready while setting up an OPC?) One passport size photo of the sole shareholder, director(s) and nominee for the sole shareholder. PAN card of the sole shareholder, director(s) and nominee for the sole shareholder. Identity proof of the sole shareholder, director(s) and nominee for the sole shareholder (Any one of: passport, voter id, driving license, Aadhar card) Address proof of the sole shareholder, director(s) and nominee for the sole shareholder (Should be in their name) (Any one of: bank statement, electricity bill, telephone bill, mobile bill, rent agreement in case of rented premises). Address proof of the place of business of the OPC (Rent agreement in case of rented premises, Index II or property tax paid receipt etc. in case of owned premises). Note: The procedure, information and documents required to set up a Company may vary as per any amendments in the Companies Act, 2013 or the e-form filing procedures and requirements of MCA website.
What is a Private Limited Company?
Private Limited Company, The most popular legal structure for businesses, should be chosen by anyone looking to build a scalable business. Indian start-ups and growing companies pick it because it allows outside funding to be raised easily, limits the liabilities of its shareholders and enables them to offer employee stock options to attract top talent.Private Limited Companies are closely held companies where minimum number of members is two and maximum number is Two hundred. A private limited company has the Limited Liability of members, greater Stability and Separate legal entity &has all the advantages of partnership namely flexibility, greater capital combination etc. Private companies may issue stock and have shareholders. However, their shares do not trade on public exchanges and are not issued through an initial public offering.Shareholders may not be able to sell their shares without the agreement of the other shareholders. Scope of expansion is higher because easy to raise capital from financial institutions and the advantage of limited liability. In this sense, a private limited company stands between partnership and widely owned public company. Identifying marks of a private limited company are name, number of members, shares, formation, management, directors and meetings, etc.Pvt. Ltd places certain restrictions on its ownership that are defined in the company's bylaws or regulations and are meant to prevent any hostile takeover attempt.
What is a Partnership Firm?
Partnership: A partnership is a special type of contract and is a relation between two or more persons who have agreed to share profits of a business run by all or any one of them acting for all. The essence of a partnership is a contract between partners. It is mandatory for partners to share profits among themselves. DIFFERENCE BETWEEN LLP & PARTNERSHIP Cost: The price for registration of LLP is generally more than the price for registration of a partnership firm. Authority: LLPs are registered in India under the Ministry of Corporate Affairs (MCA), governed by the Central Government. Partnership firms are registered with the Registrar of Firms, Controlled by the respective government during which the firm is registered. Limited Liability Protection: the most advantage of a limited liability Partnership over a conventional partnership firm is that in an LLP, one partner isn't responsible or accountable for another partner's misconduct or negligence. Number of Partners: LLPs and Partnership Firms must compulsorily have a minimum of two partners to be registered. Post incorporation, an LLP can have unlimited partners. In case of a Partnership Firm, if the number of partners at any time reduces below the mandatory minimum of two because of death, incapacitation or resignation of a Partner, the partnership firm would stand dissolved. On the other hand, just in case of an LLP, if the number of Partners reduces below 2, the sole Partner can still find a replacement Partner to fill the position without dissolution of the LLP A partnership is one of the oldest business structures in India and is governed by the Indian Partnership Act, 1932. A partnership firm does not have an independent status apart from the partners constituting it. A partnership is not a legal entity; it has a limited identity for the purpose of tax laws. Any two people who are capable of entering into a contract can start a partnership business under an agreement called a partnership deed. The partnership agreement can be oral or written. It is not mandatory to register a partnership deed, but it is advisable to do so for evidential purposes since a firm cannot file a suit against a third party if it is unregistered. Forming a partnership firm is simple since it does not have to be registered to start operations. A partner is an agent of the firm and all other partners. Each partner is liable for the actions of the other partners. Documents for Partnership Registration Basic document for registering a partnership firm is the executed partnership deed. List of Other Documents Partnership Deed Signed by all Partners Primary ID - Permanent Account Number (PAN) Additional ID - Aadhaar Card Latest Address Proof: Telephone Bill or Electricity Bill or Bank Statement or Bank Passbook with latest entries Advantages of Partnership Firm Simple to Form and Easy to Operate A Partnership is very simple to form and easy to manage condisering the regultory requiremets of Limited Company or Limited Liability Partnership. Registration is not Mandatory Registration of Partnership under the Partnership Act is not Mandatory. It is optional to the partners of the Firm. However, an unregistered partnership may face difficulties in getting the agreement terms enforced under law. Simple Compliance Needs Regulatory compliance requirements of partnership are much simpler compared to Limited Companies and LLP. However, the compliances related to Taxation and other operational matters are equally applicable to Partnership.
How to pre-validate your bank Account?
The income tax authorities process the tax returns (ITR) filed by assessees and if any refund is due, a refund order is issued for direct credit to the taxpayer’s bank account. Since March 2019, the income tax department only issues e-refunds and physical dispatch of refund cheques has been discontinued. Hence, it is important to pre-validate the desired bank account of the taxpayer on the income tax portal to ensure a smooth refund process. The other advantage is that the income tax returns can be e-verified (EVC) using the prevalidated bank account. Login to e-filing portalTo register one’s account, one should login to the e-filing portal at https://www.incometaxindiaefiling.gov.in/home. Enter your login ID, password and a captcha that appears, to login. Registered bank accountsAfter logging in, go to ‘Profile settings’ and click on ‘Pre-validate your bank account’ option. A list of bank accounts that have been registered on the e-filing portal will be displayed along with status of registration. Adding another accountIf no accounts are displayed or the taxpayer wishes to add another bank account for processing of e-refunds, he needs to click on ‘Add’ and enter bank account details and contact details. PAN should have been seeded with the bank account to be added and the name on the PAN card should match the name on the bank account, in such a case the account will be pre-validated. After entering the details, the taxpayer can click on the ‘Pre-validate’ button to validate the account. A transaction acknowledgement number will be displayed on the screen. Points to note Only one account can be registered at a time for e-verification of returns.If the email ID and mobile number registered with the bank account matches with the details on the portal, such account can be used for electronic verification to verify returns filed by taxpayers.
How to file Income Tax Return (ITR) Online?
Prepare and Submit ITR Online: To Prepare and Submit ITR Online, please follow the below steps : Login to e-Filing website with User ID, Password and Captcha. Go to e-File and click on "Prepare and Submit ITR Online". Only ITRs 1 and 4S can be filled online Select the Income Tax Return Form ITR 1/ITR 4S and the Assessment Year. Fill in the details and click the"Submit" button. Upload Digital Signature Certificate (DSC), if applicable. Please ensure the DSC is registered with e-Filing. Click on "Submit" button. On successful submission, ITR-V would be displayed (if DSC is not used). Click on the link and download the ITR-V. ITR-V will also be sent to the registered email. If ITR is uploaded with DSC, the Return Filing process is complete. ORThe return is not uploaded with DSC, the ITR-V Form should be printed, signed and submitted to CPC within 120 days from the date of e-Filing. The return will be processed only upon receipt of signed ITR-V. Please check your emails/SMS for reminders on .non-receipt of ITR-V. This ends the process of preparing & submitting ITR Online by Taxpayer. To Upload ITR , please follow the below steps: Download the ITR preparation software for the relevant assessment year to your PC / Laptop from the"Downloads" page. Prepare the Return using the downloaded Software. Gather all the information regarding your income, tax payments, deductions etc. Pre-populate the personal details and tax payments/TDS by clicking on the 'Pre-fill' button. Compare with the information you have to ensure that nothing is left out. Enter all data and click on 'Calculate' to compute the tax and interest liability and final figure of Refund or Tax payable If Tax is payable- remember to pay immediately and enter the details in appropriate schedule. Repeat above step so that tax payable becomes zero Generate and save the Income Tax Return data in XML format in the desired path/place on your PC/Laptop. Login to e-Filing website with User ID, Password and enter the Captcha code. Go to e-File and click on "Upload Return". Select the appropriate ITR, Assessment Year and XML file previously saved in Step 2 (using browse button). Upload Digital Signature Certificate (DSC), if applicable. Please ensure the DSC is registered with e-Filing. Click on "Submit" button. On successful submission, ITR-V would be displayed (if DSC is not used). Click on the link and download the ITR-V. ITR-V will also be sent to the registered email. If ITR is uploaded with DSC, the Return Filing process is complete. ORThe return is not uploaded with DSC, the ITR-V Form should be printed, signed and submitted to CPC within 120 days from the date of e-Filing. The return will be processed only upon receipt of signed ITR-V. Please check your emails/SMS for reminders on .non-receipt of ITR-V. Upload Income Tax Return process is complete now.
How to correct mistake(s) made in Income tax return?
What is a revised return?Revised return allows you to rectify the error or omission of facts made at the time of filing your original ITR. Filing a revised return simply means filing your return again but this time with the correct information. When filing a revised return you need to mention details of the original return. Who can file it?Every assessee who has filed his/her ITR is entitled to revise it under section 139(5) to provide correct information to the tax department. Earlier, only those taxpayers who had filed ITR before the expiry of the deadline were allowed to revise their returns. Taxpayers who had filed belated returns, i.e., after the expiry of original deadline to file ITR were not allowed to revise it. However, now, even belated returns now be revised. What is the Last date to file revised ITR?Earlier, tax laws allowed taxpayers to file revised return till one year after the expiry of the assessment year. This meant that taxpayers had two years from the end of the relevant financial year (the FY for which the return was filed) to correct the mistake and file a revised return. But the time limit to file a revised ITR was reduced last year Starting from last year, the time limit to revise the ITR has been reduced. According to current income tax laws, you now only have time till the completion of the relevant assessment year to rectify your mistake. Thus, once you have filed ITR for FY 2018-19, you have time till March 31, 2020 to correct your mistake, if any. How to file revised ITR?The process of filing a revised ITR is the same as filing an original one. However, while filing a revised ITR, you are required to file it under section 139(5) of the Income-tax Act. You are required to select option '17 - Revised u/s 139(5)' in the 'return filed under' column. The ITR form will additionally ask you for details of the original ITR, i.e. receipt number and date of filing of original ITR. How many times you can file a revised return?There is no limit for the number of times you can file a revised return. Remember, every time you file a revised return, you are required to provide details of your original ITR. Revising your tax return is a chance for you to rectify your mistake, but one should avoid misuse of this facility and ensure utmost care while filing the original tax return. Things to rememberOnce you have filed your revised ITR, ensure that you have verified the same. The income tax department will not accept your revised tax return, unless it is verified by you. To verify your revised income tax return, you can use any of the 6 methods available to verify your ITR, i.e., e-verification by using electronic methods such as Aadhaar, OTP, EVC through net-banking or via physical verification by sending signed copy of ITR-V (Acknowledgement Receipt) to CPC, Bangalore. Once the scrutiny assessment of your ITR is completed under section 143(3) of the Income-tax Act by the assessing officer, then you cannot file a revised return. As a taxpayer you must remember that the deadline to rectify the mistake in your tax return and to file belated return is same, i.e. March 31st of the relevant assessment year. Therefore, if you file a belated return on March 31st, 2020 for the FY 2018-19 (AY 2019-20) you will miss out the chance to rectify the mistake done by you, if any, in your ITR.
How to know the status of Income tax refund?
To view Refund/ Demand Status, please follow the below steps: Login to e-Filing website [ https://incometaxindiaefiling.gov.in/e-Filing/UserLogin/LoginHome.html] with User ID, Password and Captcha. Go to My Account and click on"Refund/Demand Status". Below details would be displayed. Assessment Year Status Reason (For Refund Failure if any) Mode of Payment is displayed. Taxpayer can now view Refund/ Demand Status. Or, you can also visit https://tin.tin.nsdl.com/oltas/refund-status-pan.html
Understanding Provisions of Advance Tax
Citizens of the country are liable to pay tax on the income earned under the Income Tax Act, 1961. Income earned in the financial year is assessed in the next year, known as Assessment Year. However, though the income is assessed in the Assessment Year, taxes are generally paid in advance through Tax Deduction at Source (TDS) or advance tax. Understanding advance tax Advance tax is a form of income tax that is payable in case your tax liability exceeds INR 10,000 for a particular financial year. This tax must be paid by the taxpayers in the same year the income is received. For this purpose, advance tax is also known as ‘pay-as-you-earn’ scheme. For example, in case your tax liability for the financial year 2019-20 is more than INR 10,000, you are required to pay advance tax in the same year, i.e. 2019-20. The main purpose of levying an advance tax in the same year rather than at the end of the year is to ensure that the government receives a constant flow of income throughout the year. This helps them meet expenses easily. Who pays advance tax? Salaried individuals do not have to pay advance tax as employers generally deduct the tax at source. Advance tax is, therefore, levied on individuals who have sources of income other than salary. This includes income that is received through capital gains on shares. You are also required to pay advance tax on interest earned through Fixed Deposits (FDs), rent received from house property, as well as winnings earned through a lottery. You may note that self-employed individuals, businessmen, companies, and corporates too need to pay advance tax. The process of filing advance tax Certain bank branches are authorized by the Income Tax Department to collect advance tax through tax payment challans. Some banks, which collect advance tax include Reserve Bank of India, HDFC Bank, Allahabad Bank, ICICI Bank, and State Bank of India, among others. You may also pay advance tax through the internet, either through the Income Tax Department or National Securities Depository Ltd. (NSDL). Advance tax calculation With the help of an income tax calculator, you may determine the amount of tax to be paid. Alternatively, you may follow the below-mentioned steps to ascertain the amount of advance tax to be paid. Determine your total income earned through various sources other than salary. Deduct all related expenses such as internet costs, phone bills, travel expenses, and rent of the workspace, among others. Sum up other income received through the year. This may include income from FDs, house rent, and lottery earnings, besides many others. In case the calculated tax amount is higher than INR 10,000, you are liable to pay advance tax. It is important to note that failure to pay advance tax by the stipulated deadline attracts a penalty. You may, therefore, do your due diligence and pay your taxes on time.
Income Tax Audit
What is income tax audit?The dictionary meaning of the term "audit" is check, review, inspection, etc. There are various types of audits prescribed under different laws like company law requires a company audit, cost accounting law requires a cost audit, etc. The Income-tax Law requires the taxpayer to get the audit of the accounts of his business/profession from the view point of Income-tax Law. Section 44AB gives the provisions relating to the class of taxpayers who are required to get their accounts audited from a chartered accountant. The audit under section 44AB aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfillment of other requirements of the Income-tax Law. The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44AB is called tax audit. The chartered accountant conducting the tax audit is required to give his findings, observation, etc., in the form of audit report. The report of tax audit is to be given by the chartered accountant in Form Nos. 3CA/3CB and 3CD. . What is the objective of income tax audit? One of the objectives of tax audit is to ascertain/derive/report the requirements of Form Nos. 3CA/3CB and 3CD. Apart from reporting requirements of Form Nos. 3CA/3CB and 3CD, a proper audit for tax purposes would ensure that the books of account and other records are properly maintained, that they truly reflect the income of the taxpayer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of accounts before the tax authorities and considerably save the time of Assessing Officers in carrying out routine verifications, like checking correctness of totals and verifying whether purchases and sales are properly vouched for or not. The time of the Assessing Officers saved could be utilised for attending to more important and investigational aspects of a case. ..As per section 44AB, who is compulsorily required to get his accounts audited, i.e., who is covered by tax audit? As per section 44AB, following persons are compulsorily required to get their accounts audited : • A person carrying on business, if his total sales, turnover or gross receipts (as the case may be) in business for the year exceed or exceeds Rs. 1 crore. This provision is not applicable to the person, who opts for presumptive taxation scheme under section 44AD and his total sales or turnover doesnot excceeds Rs. 2 crores. • A person carrying on profession, if his gross receipts in profession for the year exceed Rs. 50 lakhs. • An assessee who declares profit for any previous year in accordance with section 44AD and he decreases profit for any of one 5 assessment year rufuant to the previous year succeding such previous year lower than the profit compused as per section 44AD and his income exceeds the amount which is not chargeable to tax. • If an eligible assessee opts out of the presumptive taxation scheme, within the oforesaid period, he cannot choose to revert back to the presumptive taxation scheme for a period of five assessment years thereafter. (*) For provisions of section 44AD refer tutorial on “Tax on presumptive basis in case of certain eligible business”. • A person who is eligible to opt for the presumptive taxation scheme of section 44ADA (*) but he claims the profits or gains for such profession to be lower than the profit and gains computed as per the presumptive taxation scheme and his income exceeds the amount which is not chargeable to tax. • A This provision is not applicable to the person, who opts for presumptive taxation scheme under section 44AD and his total sales or turnover doesnot excceeds Rs. 2 crores. (*) For provision of section 44ADA, refer tutorial on “Tax on presumptive basis in case of certain eligible business” • A person who is eligible to opt for the presumptive taxation scheme of sections 44AE (*) but he claims the profits or gains for such business to be lower than the profits and gains computed as per the presumptive taxation scheme of sections 44AE. (*) For provisions of sections 44AE refer tutorial on “Tax on presumptive basis in case of certain eligible business”. • A person who is eligible to opt for the taxation scheme prescribed under section 44BB (*) or section 44BBB (*) but he claims the profits or gains for such business to be lower than the profits and gains computed as per the taxation scheme of these sections. (*) section 44BB is applicable to non-resident taxpayers engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire basis to be used in exploration of mineral oils. section 44BBB is applicable to foreign companies engaged in the business of civil construction or erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project. . If a person is required by or under any other law to get his accounts audited, then is it compulsory for him to once again get his accounts audited to comply with the requirement of section 44AB? Persons like company or co-operative society are required to get their accounts audited under their respective law. Section 44AB provides that, if a person is required by or under any other law to get his accounts audited, then he need not again get his accounts audited to comply with the requirement of section 44AB. Is such a case, it shall be sufficient if such person gets the accounts of such business or profession audited under such law and obtains the report of the audit as required under such other law and also a report by the chartered accountant in the form prescribed under section 44AB, i.e., Form No. 3CA and Form 3CD (refer to next FAQ for relevance of these forms). . What are Form Nos. 3CA/3CB and 3CD? The report of the tax audit conducted by the chartered accountant is to be furnished in the prescribed form. The form prescribed for audit report in respect of audit conducted under section 44AB is Form No. 3CB and the prescribed particulars are to be reported in Form No. 3CD. In case of persons covered under previous FAQ, i.e., who are required to get their accounts audited by or under any other law, the form prescribed for audit report is Form No. 3CA/3CB and the prescribed particulars are to be reported in Form No. 3CD. . What is the due date by which a taxpayer should get his accounts audited? A person covered by section 44AB should get his accounts audited and should obtain the audit report on or before the due date of filing of the return of income, i.e., on or before 30th September (*) of the relevant assessment year, e.g., Tax audit report for the financial year 2017-18 corresponding to the assessment year 2018-19 should be obtained on or before 30th September, 2018 The due date for filing of audit report under section 44AB has been extended from September 30, 2018 to October 31, 2018 vide F.No. 225/358/2018/ITA.II dated October 08, 2018. (*) In case of a taxpayer who is required to furnish a report in Form No. 3CEB under section 92 in respect of any international transaction or specified domestic transaction, the due date of filing the return of income is 30th November of the relevant assessment year. The tax audit report is to be electronically filed by the chartered accountant to the Income-tax Department. After filing of report by the chartered accountant, the taxpayer has to approve the report from his e-fling account with Income-tax Department (i.e., at www.incometaxindiaefiling.gov.in). . What is the penalty for not getting the accounts audited as required by section 44AB? According to section 271B, if any person who is required to comply with section 44AB fails to get his accounts audited in respect of any year or years as required under section 44AB or furnish such report as required under section 44AB, the Assessing Officer may impose a penalty. The penalty shall be lower of the following amounts: (a) 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such year or years. (b) Rs. 1,50,000. However, according to section 271B, no penalty shall be imposed if reasonable cause for such failure is proved.