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Common questions on bookkeeping, company incorporation, ROC filings and Companies Act compliance – answered by a practising Chartered Accountant.
Accounting & Companies ActHow is turnover calculated for tax audit and 44AD, including F&O?Bottom line: For F&O, turnover is the absolute total of profits and losses — not the contract value — and it decides your audit limit. 1. F&O turnover…Accounting & Companies ActWhat is deferred tax (DTA and DTL) in simple terms?Bottom line: Deferred tax arises because your book profit and your taxable profit differ due to timing. 1. Why it happens Items like depreciation are treated differently under…Accounting & Companies ActDepreciation under the Companies Act vs the Income-tax Act — what is the difference?Bottom line: The Companies Act depreciates each asset over its useful life; income tax uses fixed block rates on the written-down value. 1. Companies Act Schedule II sets…Accounting & Companies ActIs a director’s report mandatory for a small company?Bottom line: Yes — every company must attach a Board's report to its financial statements, but a small company files an abridged one. 1. The rule Section 134…Accounting & Companies ActWhat is the difference between statutory audit, tax audit and internal audit?Bottom line: Statutory audit applies to every company, tax audit is turnover-based, and internal audit applies to larger companies. 1. Statutory audit Mandatory for every company under the…Accounting & Companies ActWhat are the cash transaction limits under Sections 269ST and 40A(3)?Bottom line: You cannot receive ₹2,00,000 or more in cash from one person in a day, and business cash expenses above ₹10,000 are disallowed. 1. Section 269ST Receiving…Accounting & Companies ActWhat is the difference between TDS and TCS?Bottom line: TDS is deducted by the payer on certain payments; TCS is collected by the seller on certain sales. 1. TDS The payer withholds tax on salary,…Accounting & Companies ActUnder Section 44AD, can I declare a lower profit, and when does audit apply?Bottom line: Section 44AD deems 8% of turnover (6% for digital receipts) as income — declaring less can trigger a tax audit. 1. The scheme Available for a…Accounting & Companies ActSection 43B(h): the 45-day MSME payment rule and when the expense is disallowedBottom line: If you do not pay a registered micro or small supplier within the MSME time limit, that expense is disallowed until you actually pay it. 1.…Accounting & Companies ActWhat books of accounts must a business keep, and for how long?Bottom line: A company must keep proper books for at least 8 years; income-tax rules require 6 years. 1. Companies Act Section 128 requires every company to maintain…Accounting & Companies ActWhat are the due dates for AOC-4 and MGT-7 ROC annual filing for a private limited company?AOC-4 is due within 30 days of your AGM, and MGT-7 (or MGT-7A for small companies and OPCs) within 60 days of the AGM. Since the AGM is…Accounting & Companies ActWhat is the turnover limit for presumptive taxation under Section 44AD and 44ADA?Under Section 44AD, businesses can use presumptive taxation up to Rs 2 crore turnover, extended to Rs 3 crore if cash receipts are 5% or less of total…Accounting & Companies ActWhat is the difference between a private limited company and an LLP in India?A private limited company offers easier equity fundraising and stronger credibility but has heavier compliance, while an LLP has lower cost and lighter compliance but limited ability to…Accounting & Companies ActWhat is the minimum number of directors and members for a private limited company?A private limited company needs a minimum of 2 directors and 2 members (shareholders), and can have up to 200 members. At least one director must be resident…Accounting & Companies ActWhat is the difference between depreciation under the Companies Act and the Income Tax Act?The Companies Act 2013 (Schedule II) computes depreciation over the useful life of each asset, while the Income Tax Act 1961 uses fixed percentage rates on the written-down…Accounting & Companies ActWhat is DIR-3 KYC and what is its due date for directors?DIR-3 KYC is the mandatory annual KYC every individual holding a Director Identification Number (DIN) must file with the MCA, normally due by 30 September each year for…Accounting & Companies ActIs statutory audit mandatory for every private limited company?Yes. Statutory audit is compulsory for every company registered under the Companies Act 2013, irrespective of turnover, profit or whether any business was carried on. Even a dormant…Accounting & Companies ActWhat is Form AOC-4 and Form MGT-7 in company annual filing?AOC-4 is the form for filing your company audited financial statements with the Registrar of Companies, while MGT-7 is the form for filing your annual return. AOC-4 carries…Accounting & Companies ActWhat is the difference between a balance sheet and a profit and loss account?A profit and loss account shows your income and expenses over a period to arrive at profit or loss, while a balance sheet shows what the business owns…Accounting & Companies ActWhat is the tax audit turnover limit under Section 44AB for FY 2026-27?A tax audit under Section 44AB is required if business turnover exceeds Rs 1 crore, but the limit rises to Rs 10 crore where both cash receipts and…
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