UDIN for Loan Purposes: Impact on Profit & Loss Account, Statement of Affairs, Computation, and ITR under Section 44AD

Can UDIN be provided on profit & loss account, statement of affairs, computation, and ITR copy for loan purposes if ITR is filed under section 44AD?

UDIN_Bank_loan_ITR

No, it is not necessary to provide a Unique Document Identification Number (UDIN) on the profit and loss account, statement of affairs, computation, and Income Tax Return (ITR) copy if the ITR has been filed under section 44AD. Section 44AD constitutes a presumptive taxation scheme that permits businesses to calculate their taxable income at a flat rate of 8% of their turnover. This scheme exempts businesses from maintaining conventional bookkeeping practices or undergoing financial statement audits by a chartered accountant. Consequently, the requirement for a UDIN, which is a distinctive document identification number generated by a chartered accountant for certifying or attesting documents, is negated.

However, it's important to note that specific banks might still mandate a UDIN even when the ITR is filed under section 44AD. Such banks could seek independent validation of the financial statements. In such instances, the business has the option to either undergo a financial statement audit by a chartered accountant or obtain a UDIN from a chartered accountant authorized by the bank to issue UDINs.

Here are a few reasons explaining why certain banks may necessitate a UDIN even in cases where the ITR is filed under section 44AD:

1. Verification of Authenticity: Banks use UDINs to authenticate financial documents.

2. Adherence to Accounting Standards: Ensures alignment with relevant accounting standards.

3. Assessment of Financial Health: Helps evaluate the financial status of the business.

4. Risk Mitigation: Aids in minimizing lending risks associated with potentially fraudulent businesses.

Should you be pursuing a bank loan and the bank stipulates a requirement for a UDIN, it's advisable to communicate with your chartered accountant. They can provide guidance on the best course of action in your particular situation.


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