• Jun
  • 16
  • 2013

Section 44AD (Presumptive Taxation (AY 2013-14)

Applicable    : Any business except plying, hiring, or leasing goods carriage referred U/s 44AE and whose turnover is less than 100 lacs. It covers manufactures, job workers, processing industry and wholesalers

Eligible Assessee: Any resident Individual ,HUF, Partnership firms(excluding LLP) and who has not claimed deduction u/s 10AA or deduction under any provision of chapter VI-A under heading “C-Deduction in respect of certain incomes”

There has been insertion by finance act 2012 in section 44AD to exclude applicability of presumptive provision on following—-

  • Person carrying profession as mentioned u/s 44AA(1) –legal, medical, engineering, or architectural or accountancy profession or technical consultancy or interior decoration or any other profession notified by the board.
  • Person earning commission in nature of brokerage.
  • Person carrying agency business

CERTAIN OTHER POINTS OF CONSIDERATION

  • An assessee opting for the above scheme shall be exempted from maintenance of books of account related to such business as required under section 44AA.
  • The assessee can voluntarily declare a higher income in his return
  • An assessee opting for the above scheme shall be exempted from payment of advance tax related to such business.
  • In the case of assessee being firm, the normal deduction in respect of salary and interest paid to the partners shall be allowed as deduction out of such presumptive income subject to conditions and limits specified in clause (b) of section 40.
  • In case assessee claims that he has earned income lower than specified percentage and such income is more than maximum amount not chargeable to tax, Ss. 44AD(5) and 44AA(2)(iv), mandates him to maintain books of accounts and other documents as specified u/s 44AA, get them audited from the accountant and furnish report as required u/s 44AB.

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SHUBHI GOEL

Shubhigoel1989@gmail.com

Sandeep Kanoi

11 Responses to “Section 44AD (Presumptive Taxation (AY 2013-14)”

  1. AMIT AGARWAL says:

    I HAVE RETAIL BUSINESS HAVING TURNOVER OF 59 LACS AND PROFIT OF 7 LACS . CAN I FILE RETURN UNDER SECTION 44AD OF 8%

  2. latish says:

    SIR,
    MY BUSINESS IS SEMI-WHOLESALER IN CLOTH. MY TOUR OVER IS RS.45,00,000/- AND TOTAL PROFIT IS RS.1,75,000/-.(I.E- BELOW EXEMPTION LIMIT). MY QUES. IS, IT IS COMPULSORY TO MAKE AUDIT OR NOT.
    PLEASE GIVE ADVICE IT IS ARGENT.
    THANK YOU

  3. Dharmesh says:

    What will be the situation if the assessee has loss in his business and wishes to claim such loss. whether s. 44AD will be compulsory as 44AD(1) requires the minimum profit of 8%. In this case since i do not fall within the conditions of s. 44AD(5) (since my income is below taxable limits), i need not maintain the books and get them audited. If 44AD(5) not applicable, will fall under 44AD(1) automatically?

  4. Darshan says:

    I have Two ques, 1) In computing Tax liability U Sec. 44 AF or 44AD, what is the Turnover to be declared of the Assesse who is engaged in retail trade attracting local VAT @ 14.5 %, example Goods sold by him under retail trade is 20 Lakhs and + VAT at 14.5% i.e 2.90 Lakhs =22.9 Lakhs or only Rs 20 Lakhs on which he/she can claim deemed profits @ 8% or more? and

    Q. 2) In computing Tax liability U Sec. 44 AF or 44AD,if the assesse is having net profits on the T.O Exceeding 14 % and declares profits @ 8 Percent as taxable Income, will it be acceptable by the A.O.?

    Please Guide

  5. Jagdish says:

    What is mejor changes in this act?

  6. shubhi goel says:

    Change is____
    There has been insertion by finance act 2012 in section 44AD to exclude applicability of presumptive provision on following—-
    Person carrying profession as mentioned u/s 44AA(1) –legal, medical, engineering, or architectural or accountancy profession or technical consultancy or interior decoration or any other profession notified by the board.
    Person earning commission in nature of brokerage.
    Person carrying agency business

  7. shubhi goel says:

    Section 44AD (1) starts with wordings “Notwithstanding anything contrary contained in S. 28 to 43C”. Clearly, Section 44AD will override the said sections and thus the profit to be taken for computation of limits of remuneration is the presumptive profit as computed under subsection (1) of section 44AD.

    So, for example, turnover of the business is Rs.60,00,000/-
    Profit @ 8% shall be Rs. 4,80,000/-
    Remuneration as per deed is Rs.1,50,000/-
    Interest is Rs. 1,00,000/-

    The restriction will be cross checked taking Rs. 4,00,000/- as the base
    So, on first Rs.3,00,000/-, 90% i.e. Rs. 2,70,000/-
    On balance Rs. 1,80,000/-, 60% i.e. Rs. 108,000/-

    Total limit is Rs. 3,78,000/-

    Actual remuneration paid is Rs. 1,50,000/- which is well within the limit, thus allowed.

    The computation will be

    Profit As Per S. 44AD Rs. 4,80,000
    Less: Remuneration Rs. 1,50,000
    Less: Interest Rs. 1,00,000

    Net Profit (taxable) Rs. 2,30,000

  8. Gopal says:

    Pls clearfy 44AD(5) how can maintain book of account
    manufacturing unit will be coverd u/s 44 AD or not?

  9. MD says:

    What is the change?

  10. Sheetal says:

    Sir
    Thank you for a valuable information.

    Can you provide information regarding method of calculation of interest on partners capital when books of accounts not maintained and income calculated on presumptive basis u/s 44AD.

  11. Harish Aery says:

    What is the change?

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