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.
After section 44AD of the Income-tax Act, the section 44ADA shall be inserted with effect from the 1st day of April, 2017, namely:—
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? |
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| 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
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| 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:
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| How much is the presumptive income to be offered? | Higher of:
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| Benefits of following this proposed section |
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| 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:
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| If the assessee follows this section, following items shall be deemed to be allowed |
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| 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. |
| Author’s notes |
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(Author can be reached at ssayyarandco@gmail.com)
(Republished With Amendments)
Sir,
My gross receipt is Rs.14 Lacs from professional fees in FY 18-19. My expenses are around 3 Lac. My net book profit is Rs.11 Lacs. Can I eligible u/s 44ADA? Can pay straight tax on Rs.7 Lacs (i.e.50% of receipt) and don’t pay tax on Rs.11 Lacs? Please guide.
I have a software development business, having turnover of 40Lac. I am paying salary to my developer Rs.18 lac per annum and other business expenses comes to Rs 10 lac per annum, all by cheque. I do not want to opt for 44ada as my taxable income is less than 50%. If I don’t opt for 44ada, is it compulsory for me to get my books audited. As I am in software, but I am running a business, what is my category, professional or businessman?
Till last financial year 2017-2018 i was salaried. from april 2019 i started to work for a foreign company as their representative. i will be paid for every 4 weeks as salary or rep fee + travel allowance to meet the clients as per their instruction. the billing should be done once in 3 months or 6 months as suggested by the company. so pls suggest me should i opt for UNDER SECTION 44ADA on the gross income less than 35 lac, which includes bonuses or incentives, need your suggestion as the enitire services are rendered to a foreign company and the payments will be remitted. should i register for GST. SHOULD i need to maintain books of accounts. awaiting for you reply a the earliest.
I am earning regular quarterly income by giving consultancy services for a foreign company . My annual receipts will be around min Rs. 28.00 lac m to 40 lac per annum. Can I avail the benefit of section 44ADA i.e. presumptive taxation scheme.
planning to start a small business for a foreign company in india as a rep. the total annul billing would be min 30 lakhs and max 45 lakhs. so pls advice which type of firm i should register and do i need to maintain the books of accounts
A professional claiming presumptive income under 44ADA is not required to maintain books under 44AA – where is it mentioned in the Act or in the Rules. Is it an interpretation of the author without any legal pronouncement or is there any clear legal mandate to that effect
I run computer institute mscit and ccc cources . so i can file the income tax return under 44AD as Profit 8%
I am earning regular monthly income by giving parenting tips online in case of new born babies. My annual receipts will be around Rs. 5.50 lac. Can I avail the benefit of section 44ADA i.e. presumptive taxation scheme.
Under Normal Taxation:
My gross revenue this year from projects (am a freelance writer) +interests is 4.8L. My expenses for the same (marketing, advertising, internet usage, artwork(yes, I love collecting art) that I am using in my products (to advertise, to showcase) amounts to 1L. My net profit accumulated is 3.8L. Under normal circumstances, I assume that my taxable income is 3.8L and I have to pay the taxes via the current slab rate and file ITR-4.
I am thinking of using the presumptive taxation scheme under 44ADA. This means I assume that 50% of 4.8L, ie 2.4L as net profit. I guess that means 2.4L is my taxable income, but then the tax here is 0 according the current IT slab rate.
Question is, should I opt for the presumptive tax scheme as compared to the normal computation, the net taxable income is not less than half of the gross income computed under presumptive scheme? If presumptive scheme is opted, should I be paying tax or not? Because 2.4L is 0.1L below the min tax bracket. Or should I just go with normal taxation and pay tax on the 2.8L? In this case, does this mean I am entitled to a rebate/refund?
I am a seafarer and i could not complete my NRI days for this financial year, can i file return under section 44ada.
Kindly advice
CAN INSURANCE AGENT’S INCOME IS PRESUMTIVE INCOME
Dear Sir,
The total invoice value of my services from August 2018 to March is expected to be 50,23,260 Rupees inclusive of GST Amount.
The total value of my services without GST Amount is 42,57,000 Rupees.
Is Section 44ADA applicable to me.
Whereas the law says as below.
How much is the presumptive income to be offered? Higher of:
50% of the gross receipts from profession
(OR)
Income from profession offered by the assessee
Where my income from services is 42,57,000 Rupees ONLY, the balance amount of GST is being deposited in the GST account of the company where we offer services. We are just acting like a postman in this process, and there is no income in the GST claims and depositing in the treasury.
Please clarify for contract assistant professors this act is applicable or not.
I am a post graduate of National Institute of Fashion Technology. This FY I have been contracted by a big store chain of US to develop & assess the vendors for supplying goods to them. I get a fixed monthly sum in USD with annual sum being < 25 INR. Can I utilize sec 44ADA under Technical Consultancy.
is tution professional income
If my accounts are audited u/s 44ADA, whether provision of TDS deductions will be applicable on me?
If yes, than for all sections or some particular section?
Hi,
In the Income Tax Department Document,
there is a clause that 44AD is not applicable to LLPs.
But they have not written anything about section 44ADA.
My question is, as an LLP, can i file my Income Tax using 44ADA.
Follow up question, for filing advance tax for this financial year, will advance tax also be computed on the basis of section 44ADA.
I am govt doctor
Can I combine my clinic and salary income both for 44ADA
PLZ REPLY URGENT
I worked as a technical consultant for 4 months last year and with standard deduction of TDS 10% I was getting my money. After 4 months I am working as a company employee and getting salary.
Now under which head I need to show my 4 months income.
My Auditor is not in favour of filing my return under se 44ada. He says queries will come later on asking for cash flow statement. If no suitable explanation is provided I will have to pay tax at 70% for the disputed amount plus penalty. Your comments
My Wife is taking Home Tutions for Music (Singing).
Her Monthly Receipts is approx. Rs.10,000 to 15,000 depending on the number of students. So, yearly Gross Receipts would be approx. Rs. 1.2 Lacs to Rs. 1.8 Lacs.
Can I E-File ITR-4 & show the transactions under Section 44ADA & show presumptive income as 50% of Gross Receipts ? Do I also need to show Balance with Bank & Cash in Hand ?
Or I have to E-File ITR-1 & show it as “Income from other sources” ?
Please help me & provide your precious guidance.
can proffessionals those opted 44ADA claim chapterVIA deductions?
1)If I filed income tax returns last year under section 44 ada using ITR 4S and and this year if I am compelled to file using ITR 3 due to additional short term capital gain do I have to get accounts audited due to change in ITR form.
2)if I file using ITR 3 do I need to keep accounts and if choosen for scrutiny and I claim as expenses as 50% but actual expenses are less, what will happen
I am a medical practitioner having gross receipts of 18 lakhs last year and expenses of Rs.7 lakhs. Conventionally, I am to pay tax on profit of 11 lakhs.
If I shift to 44ADA, then I will have to pay tax on profit of Rs. 9 lakhs only (50% of receipts) thereby saving tax on Rs. 2 lakhs.
Please comment specifically whether my understanding is correct and this can be done.
My CA is of the opinion that this is not possible and I will have to pay tax on the income of 11 lakhs even if I file return u/s 44 ADA.
Where is this written that assessee shall not be liable to maintain books if he opts for taxation u/s 44ADA?
I don’t see any such provision u/s 44AA or 44ADA.
The main draw back in this presumptive tax is that partners’ salary is not allowed and as such tax is payable @ 50% of gross receipts and the salary is paid to partners after firm tax.
Whether this salary is exempt in the hands of the partners is not provided in the law. In the normal course i.e. not falling u.s 44ADA there are limits for partners’ salary which can be deducted before calculating taxable income and this salary and interest is taxable in partners’ hands.
If i file my return taking 50 % as income and my prof receipts is 20 lakhs still i need to maintain books to enable the officer to compute my income in excess of 50 % which i returned
Assessee filing under 44ADA, is it necessary to incur the expenses or without incurring any expenses still income can be shown 50% or more?
I need to use section 44ADA in ITR-3 since I have a foreign bank account with minimal balance.
In ITR-3
P&L line 53(ii)a, a professional would enter his Gross Receipts
P&L line 53(ii)b, he would enter 50% of gross receipts as Gross Profit
After doing this, in schedule BP line 4 is dimmed and shows 0. Is this OK or I need to do something else to ensure that line 4 shows the full amount.
How will the IT officer know that I am claiming 44ADA if line 4 shows 0 and I am not able to modify it? Thank you.
Does 44ADA also cover the profession of a person who functions as faculty in a Coaching Institute?
pls reply
what will be the consequences in next year if individual shown less % than 50% under section 44ADA ?
I am a partner in a firm which runs a medical clinic/small hospital. Other partner is a practising medical doctor while I am an investor and manages the space. Can my partnership firm file Income Tax return under Section 44ADA using form ITR-4 in AY-18-19? If not any other section which allows not to keep books of accounts?
Can a management consultant avail 44ADA ?
SIR,
IS ACCOUNTING INCOME AND TUTION INCOME FALL UNDER 44ADA INCOME?
Dear Sir
I am an accountant and get retainership fee, I had not opted 44ADA while filing returns for FY 2016-17, can I opt for FY 2017-18.
All such professions those depends upon public/customer, may be added in profession u/s 44ada
I AM DENTIST WITH A TURNOVER OF 15,22,000. MY NET PROFIT IS 5,19,264 WHICH IS 34 %. Now every year my NP ratio is more than 50% but this year, since i have taken commercial loan for purchasing my clinic due to which my ratio came down to 34 %. My accounts are maintained accurately by my accountant. and all figures are genuine. Please guide me as to why should i go for audit. Can i disclosed my books the way i use to file earlier.
Presumptive Taxation is a curse to Partnership Firms, because of wrong amendment carried out for not allowing Interest & Remuneration to partners from presumptive income.
Whether commision Agents are covered under this section
I am a tax consultant,not a CA/CS ,can I opt the section 44ADA
i run cooking classes , can i file my ITR4 for f.y.2016-17 u/s 44ADA with code 0607 ?
Can I claim deduction underdection 80gg
Can Beautician i.e. not having Beauty Parlor but taking orders for Bridal Make Up.
Can Cover Under Section 44ADA?
Iam working as contract lecturer in government polytechnic college.Can i come under 44ada sectin
Can I show my savings before deduct my account.
CAN BE COMMISSION AGENT IS ELIGIBLE IN ANY PROFESSION UNDER SEC 44ADA ?
PLEASE REPLY
Sir,
Insurance Agent and other business can declare 6% Income. he was received by cheque/NEFT, no cash
which year applicable from.
Hello, I have an IT job and plus doing/getting free lancing from America. I am in 30% salary bracket, so How should I pay Taxes for my Freelance work? I need to pay taxes in India or America? DO I need to pay taxes at 30% for freelance work?
I heard something about – “Presumptive Income Tax Scheme” can I use it? Thank you for the help.
is Partner getting remuneration from a professional firm is also eligible to take the benifit of Section 44ADA?
Whether L.I.C Agents are eligible under section 44ADA as profession
I am L.I.C. Agent.Shall I eligible under section 44ADA to file under profession.