In this era of reform, the taxation govt increase some compliance, but reduced some burdens at the same time, in this article I am trying to give a short view on presumptive taxation.
Presumptive taxation is nothing but a scheme that was introduced by govt to give relief to small taxpayers from the tedious job of maintenance of books of account and from getting the accounts audited, the Income-tax Act has framed the presumptive taxation scheme under sections 44AD, Section 44ADA, and section 44AE.
As per the Income-tax Act, a person engaged in business or profession is required to maintain regular books of account, and further, he has to get his accounts audited. To give relief to small taxpayers from this tedious work, the Income-tax Act has framed the presumptive taxation scheme under sections 44AD, 44ADA, and 44AE. A person adopting the presumptive taxation scheme can declare income at a prescribed rate and, in turn, is relieved from the tedious job of maintaining books of account and from getting the accounts audited.
Now the question is arise who can opt for this Scheme
The presumptive taxation scheme of section 44AD can be adopted by the following persons :
1) Resident Individual
2) Resident Hindu Undivided Family
3) Resident Partnership Firm (not Limited Liability Partnership Firm)
In other words, the scheme cannot be adopted by a non-resident and by any person other than an individual, a HUF, or a partnership firm (not a Limited Liability Partnership Firm).
This scheme cannot be adopted by a person who has made any claim towards deductions under section 10A/10AA/10B/10BA or sections 80HH to 80RRB in the relevant year.
Now let me introduce negative list
1. A person who is carrying on any agency business.
2. A person who is earning income like commission or brokerage.
3. An insurance agent cannot adopt the presumptive taxation scheme
4. A person whose total turnover or gross receipts for the year exceed Rs. 2,00,00,000 cannot adopt the presumptive taxation scheme.
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