SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS OF PROFESSION ON PRESUMPTIVE BASIS UNDER SECTION 44ADA OF INCOME TAX ACT, 1961 Wef 1.4.2017 (AY 2017-18 )
SECTION 44ADA.
(1) Notwithstanding anything contained in sections 28 to 43C ,
[in case of an assessee , being an individual or a partnership firm other than a limited liability partnership as defined under clause (n) of sub section (1) of section 2 of the limited liability partnership act ,2008(6 of 2009), who is a resident in India, and ]
An individual or a partnership firm; not an LLP , who is resident in India can avail this presumptive taxation u/s 44ADA those who are doing profession as prescribed u/s 44AA(1) of the Act .
is engaged in a profession referred to in sub section (1) of section 44 AA and whose total gross receipt do not exceed fifty lakhs rupees in a previous year , a sum equal to fifty per cent of the total gross receipt 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 “
The receipts of the assessee should not increase fifty lakh rupees . The assessee can claim his profit of fifty percent or more of the gross receipts without submitting balance sheet . He is required to maintain the books but he is not required to submit balance sheet . He has to justify his gross receipts by showing such books of accounts which he has maintained
(2) Any deduction allowable under the provisions of section 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.
The deduction u/s 30 to 38 is deemed to have already allowed and no further deduction is 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.
No further depreciation is allowed as the same is deemed to have already allowed when an assessee has filed his or her return as per section 44ADA of the Act .
(4) notwithstanding anything contained in the foregoing provisions of this section , an assssee who claims that his profits and gains from the profession are lower than the profit 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 document and furnish a report of such audit as required under section 44AB .]
If the profit shown is less than profit as per section 44ADA of the Act , then he is required to maintain the books , get it audited by a chartered Accountant 44AB(d) and submit the audit report with the department electronically . This is when the income of the assessee exceeds the maximum amount chargeable to tax .
Summary of the provision u/s 44ADA of the Act .
1. This provision is applicable to the profession as prescribed u/s 44AA(1) of the Act
2. An individual or a partnership firm can avail this provision those who are doing professions as prescribed u/s 44AA(1) of the Act .
3. This provision is applicable if the Gross receipts of the assessee are unto rupees fifty lakh rupees..
4. The assessee claims his profit earned more than or equal to fifty percent of the gross receipts , The assessee has to maintain the books of account but not required to submit the balance sheet. .
5. If the profit shown is less than fifty percent of the gross receipts then he has to get his books audited by a chartered Accountant and submit audit report electronically u/s 44AB(d) .
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It has been stated as “notwithstanding anything contained in the foregoing provisions of this section , an assssee who claims that his profits and gains from the profession are lower than the profit 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 document and furnish a report of such audit as required under section 44AB” if it is so, if the income returned is less than the maximum that is not chargeable to tax or if it is loss is it necessary to get his account audited or not?