Section 44ADA is inserted after section 44AD of Income TAx Act, 1961 with effect from financial year 2016-17 and provides Special provision for computing profits and gains of profession on presumptive basis for Certain professionals referred to in section 44AA(1) of Income Tax Act whose total gross receipts from profession does not exceed Rs. 50 lakhs in a financial year.
Extract of Section 44ADA
Special provision for computing profits and gains of profession on presumptive basis.
44ADA. (1) Notwithstanding anything contained in sections 28 to 43C, in the case of an 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 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”.
(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed.
(3) The written down value of any asset used for the purposes of profession shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.
(4) Notwithstanding anything contained in the foregoing provisions of this section, an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (1) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.]
Analysis of Provisions of New Section 44ADA
|Why this section is proposed?||
|How this is sought to be achieved?||This is sought to be achieved by inserting Section 44ADA in the Income Tax Act|
|Who is the eligible assessee?||Resident assessee who is
|Who are the beneficiaries?||Certain professionals referred to in section 44AA(1) of the Income Tax Act whose total gross receipts from profession does not exceed Rs. 50 lakhs in a financial year.|
|Who are the eligible professionals?||Persons engaged in any of the following professions:
|How much is the presumptive income to be offered?||Higher of:
|Benefits of following this proposed section||
|When shall the assessee be required to maintain books and to get the accounts audited?||If both the following conditions are satisfied, maintenance of accounts and audit are warranted:
|If the assessee follows this section, following items shall be deemed to be allowed||
|Effective date||The new section is proposed to be effective from 01.04.2017 (i.e. from Assessment Year 2017 – 18). In other words, advance tax in financial year 2016 – 17 may have to be calculated accordingly.|
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(Republished With Amendments)