Presumptive income from Business & Profession -One Must know
Created On: 31 Aug 2018 | 248 Views
this article explains the meaning of presumptive income meaning under income tax act
What is Presumptive Income under Income Tax Act ?
Presumptive income under section 44AD and 44ADA. As per section 44AA income Tax act 1962, Every person who is carrying on business or profession is required to maintain books of accounts.Presumptive taxation means income is calculated on presumptive basis rather than on actual basis.
An assessee adopting these provisions is not required to maintain the regular books of account and is also exempt from getting the books of account audited.
The scheme of section 44AD is designed to give relief to small assessees engaged in any business (except the business of plying, hiring or leasing of goods carriages referred to in section 44AE)
Applicability of the Scheme :
The provisions of section 44AD are applicable to such resident assessee who is an Individual, Hindu Undivided Family and Partnership Firm but not Limited Liability Partnership Firm.
Moreover, the provisions of section 44AD cannot be adopted by an assessee who is engaged in any profession as prescribed under section 44AA or is carrying on an agency business or is earning income in the nature of commission or brokerage. The important criteria of the scheme is the turnover or gross receipts from the eligible business. To opt for the scheme the turnover should not exceed Rs.2,00,00,000.
For a clear view ,you can read the below comparasion table:
A simple table to understand at a glance, the provisions of Sections 44AD, 44AE and 44ADA
| Particulars | Section 44AD | Section 44AE |
44ADA |
| Eligible taxpayer | Resident Individual, Resident HUF, Resident Partnership firm (excludes LLPs) and Who has not claimed any profit linked deductions (i.e., Section 10A, 10AA, 10B, 10BA) and deductions under Section 80HH to 80RRB |
Any taxpayer who owns not more than 10 goods carriages at any time during tax year “Owns” also means goods carriage taken on hire or installment where the amount payable is still due |
Resident taxpayer |
| Eligible business/ profession | Any business other than business covered under Section 44AE | Business of plying, hiring or leasing of goods carriages | Legal, medical, engineering or architectural, accountancy profession, technical consultancy, interior decoration or any other profession notified by the Board in the official gazette |
| Monetary threshold | Total turnover or gross receipts not exceeding Rs 2 crores | Not applicable | Total gross receipts not exceeding Rs 50 lakhs |
| Prescribed / presumptive income |
|
Rs 7500 per goods carriage for every month or part of the month during which the goods carriage is owned by the taxpayer in the tax year
Or Amount claimed to be actually earned |
50% of total gross receipts in a tax year |
| Person specifically excluded |
|
Not applicable | Not applicable |
| Additional provisions |
|
|
|
| Payment of advance tax | Entire advance tax can be paid by last installment of advance tax i.e., 15 March of a year In case of failure to do so, interest is leviable @ 1% on shortfall as per Section 234C |
No concession in payment of advance tax. Same shall be paid in four installments as per advance tax provisions | Entire advance tax can be paid by last installment of advance tax i.e., 15 March of a year In case of failure to do so, interest is leviable @ 1% on shortfall as per Section 234C |
Note: Any amount paid by way of advance tax on or before 31st day of March shall also be treated as advance tax paid during the financial year ending on that day.
