CA Agarwal Sanjay ‘Voice of CA’
Section 44AD of the Income Tax Act,1961 – Special provision for computing profits and gains of business on presumptive basis
Applicability –The amended provisions of this section are applicable with effect from 1st April, 2011 and will accordingly apply in relation to assessment year 2011‐12 and subsequent assessment years.
Reason for introducing new scheme for presumptive taxation
1. There has been a substantial increase in small businesses with the growth of transport and communication and general growth of the economy. A large number of businesses and service providers in rural and urban areas who earn substantial income are outside the tax‐net.
2. Introduction of presumptive tax provisions in respect of small businesses would help a number of small businesses to comply with the taxation provisions without consuming their time and resources.
3. To lowers the compliance cost for small taxpayers & also reduces the administrative burden on the tax machinery.
4. To expand the scope of presumptive taxation to all businesses.
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