Explore special provisions for computing profits and gains under the Income Tax Act, 1961, covering diverse areas such as mineral oil exploration, small businesses on presumptive basis, professions, goods carriage operations, shipping, aircraft operation, turnkey power projects, and royalty income of non-residents. Stay updated on amendments and key details for effective tax planning.
Article explains Special provisions for computing profits and gains in connection with the business of exploration etc, of mineral oils (Section 44BB), Small business on presumptive basis (Section 44AD), Profits and gains of profession on presumptive basis (Section 44ADA), business of plying, hiring or leasing goods carriages (Section 44AE), Shipping business in the case of non-residents (Section 44B), Business of operation of aircraft (Section 44BBA), Turnkey power projects (Section 44BBB) and Royalty income of non-residents (Section 44DA).
Tax Planning while setting up of a business with reference to Nature of business related with A.Y 2021-2022, A.Y 2022-2023, A.Y 2023-2024. And A.Y 2024-2025. An analysis of Eight important Deductions as per Income Tax Act.
Page Contents
- 1. Special provisions for computing profits and gains in connection with the business of exploration etc, of mineral oils (Section 44BB)
- 2. Special provisions for computing profits and gains of any small business on presumptive basis (Section 44AD)
- 3. Special provisions for computing Profits and gains of profession on presumptive basis (Section 44ADA)
- 4. Special provisions in the case of business of plying, hiring or leasing goods carriages (Section 44AE)
- 5. Special provisions in the case of shipping business in the case of non-residents (Section 44B)
- 6. Special provisions in the case of business of operation of aircraft (Section 44BBA)
- 7. Special provisions in the case of certain turnkey power projects (Section 44BBB)
- 8. Special provisions in case of royalty income of non-residents (Section 44DA)
1. Special provisions for computing profits and gains in connection with the business of exploration etc, of mineral oils (Section 44BB)
Assessment Year 2021-2022: Notwithstanding anything to the contrary contained in sections 28 to 41 and sections 43 and 43A, in the case of an assesse, being a non-resident, engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for,or extraction or production of, mineral oils, a sum equal to ten percent of the aggregate of the amounts specified shall be deemed to be the profits and gains of such business chargeable to tax under the head “profits and gains of business or profession “
Assessment Year 2022-2023: No change in the Assessment Year 2022-2023.
Assessment Year 2023-2024: No change in the Assessment Year 2023-2024.
Assessment Year 2024-2025 : Following Amendment has been inserted through the Finance Act 2023.
In section 44BBB of the Income-tax Act, after sub-section (2), the following sub-section shall be inserted with effect from the 1st day of April, 2024, namely:— “(3) Notwithstanding anything contained in sub-section (2) of section 32 and sub-section (1) of section 72, where an assessee declares profits and gains of business for any previous year in accordance with the provisions of sub-section (1), no set off of unabsorbed depreciation and brought forward loss shall be allowed to the assessee for such previous year.”
2. Special provisions for computing profits and gains of any small business on presumptive basis (Section 44AD)
Assessment Year 2021-2022. Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assesse engaged in an eligible business, a sum equal to eight percent of the total turnover or gross receipts of the asessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assesse, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or Profession “:
Provided that this sub-section shall have effect as if for the words “eight per cent “the words “six per cent “had been substituted, in respect of the amount of total turnover or gross receipts which is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed during the previous year or before the due date specified in sub-section (1) of section 139 in respect of that previous year.
a. eligible assesse means-
i. an individual, HUF or Partnership firm, who is a resident but not a LLP
ii. Who has not claimed deduction under any of the sections 10A,10AA, 10B,10BA or deduction under any provisions of chapter VIA under the heading C. “Deductions in respect of certain incomes “ in the relevant assessment year.
eligible business means —
i. any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE ;and
ii. whose total turnover or gross receipts in the previous year does not exceed an amount of two crore rupees.
Assessment Year 2022-2023: No change in the Assessment Year 2022-2023.
Assessment Year 2023-2024 : No change in the Assessment Year 2023-2024.
Assessment Year 2024-2025 : Following Amendment has been inserted through the Finance Act 2023–
Existing Provision: Sec 44AD Explanation (b)
b. eligible business means —
i. any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE; and
ii. whose total turnover or gross receipts in the previous year does not exceed an amount of two crore rupees.
Amended Provision: In section 44AD of the Income-tax Act, in the Explanation, in clause (b), after sub-clause (ii), the following provisos shall be inserted with effect from the 1st day of April, 2024, namely:— ‘Provided that where the amount or aggregate of the amounts received during the previous year, in cash, does not exceed five per cent. of the total turnover or gross receipts of such previous year, this sub-clause shall have effect as if for the words “two crore rupees”, the words “three crore rupees” had been substituted: Provided further that for the purposes of the first proviso, the receipt of amount or aggregate of amounts by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the receipt in cash.’.
3. Special provisions for computing Profits and gains of profession on presumptive basis (Section 44ADA)
Assessment Year 2021-2022: Notwithstanding anything contained in section 28 to 43 C, in the case of assessee, being a resident in India, who is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assesse in the previous year on account of such profession shall be deemed to be the profits and gains of such profession chargeable to tax under the head “Profits and gains of business or profession “.
Assessment Year 2022-2023: No change in the Assessment Year 2022-2023.
Assessment Year 2023-2024: No change in the Assessment Year 2023-2024.
Assessment Year 2024-2025: Following Amendment has been inserted through the Finance Act 2023-
Existing Provision: 44ADA. Special provision for computing profits and gains of profession on presumptive basis.—(1) Notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being an individual or a partnership firm other than a limited liability partnership as defined under clause (n) of subsection (1) of section 2of the Limited Liability Partnership Act,2008(6 of 2009),whose is a resident in India and is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head “Profits and gains of business or profession”.
New Provision: In section 44ADA of the Income-tax Act, after sub-section (1), the following provisos shall be inserted with effect from the1st day of April, 2024, namely:— ‘Provided that in case of an assessee where the amount or aggregate of the amounts received during the previous year, in cash, does not exceed five per cent. of the total gross receipts of such previous year, this sub-section shall have effect as if for the words “fifty lakh rupees”, the words “seventy-five lakh rupees” had been substituted: Provided further that for the purposes of the first proviso, the receipt of amount or aggregate of amounts by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the receipt in cash.’
4. Special provisions in the case of business of plying, hiring or leasing goods carriages (Section 44AE)
Assessment Year 2021-2022: The scheme applies to a person owning not more than 10 goods carriages at any time during the previous year. In this case Income is estimated in the following manner.
1. Heavy goods vehicle (more than 12,000 kg, gross vehicle weight)-For a heavy goods vehicle, the profits and gains shall be an amount equal to Rs 1000 per ton of gross vehicle weight for every month ( or part of a month) during which the heavy goods vehicle is owned by the assesse in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher.
2. Other than heavy goods vehicle- in the case of a goods carriage (other than heavy vehicle ), the profits and gains shall be an amount equal to Rs 7500 for every month ( or part of a month) during which the goods carriage is owned by the assesse in the previous year or an amount claimed to have been actually earned from such goods carriage, whichever is higher.
Assessment Year 2022-2023: No change in the Assessment Year 2022-2023.
Assessment Year 2023-2024: No change in the Assessment Year 2023-2024.
Assessment Year 2024-2025: No change in the Assessment Year 2024-2025.
5. Special provisions in the case of shipping business in the case of non-residents (Section 44B)
Assessment Year 2021-2022 : Notwithstanding anything to the contrary contained in sections 28 to 43 A, in the case of an assessee, being a non-resident, engaged in the business of operation of ships, a sum equal to seven and a half percent of the aggregate of the amounts specified shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession “.
Assessment Year 2022-2023: No change in the Assessment Year 2022-2023.
Assessment Year 2023-2024: No change in the Assessment Year 2023-2024.
Assessment Year 2024-2025: No change in the Assessment Year 2024-2025.
6. Special provisions in the case of business of operation of aircraft (Section 44BBA)
Assessment Year 2021-2022:
(1) Notwithstanding anything to the contrary contained in sections 28 to 43 A, in the case of an assessee, being a non-resident, engaged in the business of operation of aircraft, a sum equal to five percent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession “.
(2) The amounts referred to in sub-section (1) shall be the following, namely:-
a. the amount paid or payable to the assesse or to any person on his behalf on account of the carriage of passengers, livestock, mail or goods from any place in India; and
b. the amount received or deemed to be received in India by or on behalf of the assesse on account of the carriage of passengers, livestock, mail or goods from any place outside India.
Assessment Year 2022-2023: No change in the Assessment Year 2022-2023
Assessment Year 2023-2024: No change in the Assessment Year 2023-2024.
Assessment Year 2024-2025: No change in the Assessment Year 2024-2025.
7. Special provisions in the case of certain turnkey power projects (Section 44BBB)
Assessment Year 2024-2025
Following Amendment has been inserted through the Finance Act 2023.
In section 44BBB of the Income-tax Act, after sub-section (2), the following sub-section shall be inserted with effect from the 1st day of April, 2024, namely:— “(3) Notwithstanding anything contained in sub-section (2) of section 32 and sub-section (1) of section 72, where an assessee declares profits and gains of business for any previous year in accordance with the provisions of sub-section (1), no set off of unabsorbed depreciation.
8. Special provisions in case of royalty income of non-residents (Section 44DA)
Assessment Year 2021-2022:
1. The income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by a non-resident (not being a company) or a foreign company with Government or the Indian concern after the 31st day of March 2003,where such non-resident ( not being a company ) or a foreign company carries on business in India through a permanent establishment situated therein, or performs professional services from a fixed place of profession situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed place of profession, as the case may be, shall be computed under the head “ Profits and gains of business or profession “ in accordance with the provisions of this act
2. Every non-resident (not being a company ) or a foreign company shall keep and maintain books of account and other documents in accordance with the provisions contained in section 44AA and get his accounts audited by an accountant as defined in the Explanation below sub-section (2) of section 288 before the specified date referred to in section 44AB and furnish by that date the report of such audit in the prescribed form.
Assessment Year 2022-2023: No change in the Assessment Year 2022-2023
Assessment Year 2023-2024: No change in the Assessment Year 2023-2024.
Assessment Year 2024-2025: No change in the Assessment Year 2024-2025.
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