Section 44AD

Section 40A disallowance in case assessee opts for presumptive taxation u/s 44AD

Income Tax - Applicabilty of disallowance u/s 40A of the Act in case assessee opts for presumptive taxation u/s 44AD. Sec 40A relates to disallowance related to excess payment of related party, cash payment to a person in excess of Rs. 10,000 in a day, payment to unapproved fund, mark to market losses etc. The comparison of sec […]...

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Comprehensive analysis of Section 44AD & related aspects

Income Tax - Comprehensive analysis of Section 44AD with other related aspects The provisions of Section 44AD were introduced in the Chapter of Profits & Gains from Business or profession to reduce the compliance burden of resident small Taxpayers. Undoubtedly throughout, the concept related to “Presumptive Taxation Schemes’’ has been very w...

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Analysis of Form 3CA, Form 3CB and Form 3CD – Part 1

Income Tax - Article is first part of series of articles in which Author will Analyse Form 3CA, Form 3CB and Form 3CD related to Tax Audit under Income Tax Act, 1961- 1. Form  3CA – Audit Report under Section 44AB in a case where the accounts of the business or profession of a person have been audited […]...

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Critical analysis & issues in Tax Audit Report & OI Schedule

Income Tax - Critical issues in the tax audit report and the interplay of the form OI with the Tax audit report. Of late many assesses are receiving the intimations from the tax department for the mismatches in the tax audit report and the income tax return filing, however when one looks into the matter it is quote […]...

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Some special things related to Tax Audit

Income Tax - 1. Tax Audit is mandatory if ‘business’ is having total sales, turnover or gross receipts more than Rs. 1 crore in any Previous Year (‘PY’). [Read clause (a) of Section 44AB of the Income Tax Act, 1961 (‘the IT Act’)]. 2. However, the aforesaid limit of Rs. 1 crore shall be read as 5 crores […]...

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CPC advisory on applicability of Tax Audit to business and profession

Income Tax - Dear Taxpayer, As per the section 44AB of Income Tax Act, the books of accounts for the relevant previous year are required to be audited by a Chartered Accountant and the audit report has to be electronically filed prior to or along with the return of income before the due date. In order to assist to […]...

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Audit U/s. 44ADA not to be counted for Tax Audit Limit Calculation: ICAI

Income Tax - ICAI decided to exclude audit conducted under section 44ADA of Income-tax Act, 1961 for reckoning the specified number of tax audit assignments...

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Small Taxpayers- Avail benefits of Presumptive Taxation Scheme- CBDT

Income Tax - Small Taxpayers (Businesses&Professionals) should file their return on or before 31st july 2018 (Due date for filing Income Tax Return for A.Y. 2018-19). File Early Beat The Rush...

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Allow Benefit of presumptive taxation U/s. 44AD to LLP: ICAI

Income Tax - Section 44AD relating to presumptive taxation applies only to businesses run by residents Individual, HUF and Firms excluding LLP. Tax on presumptive basis should be extended to all assessees, including a LLP. Only section 44AD excludes LLP, for which there appears to be no cogent reason. Otherwise under the Act, a LLP and a Firm are tre...

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Section 44AD Presumptive Income – amend definition of eligible business

Income Tax - According to the new provisions, in case of an eligible assessee engaged in eligible business, income shall be deemed equal to a sum @ 8% of the turnover or higher income as per books. Section 44AD is applicable to any business except the business of plying...

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Section 44AD not obligates assessee to maintain books of account

Nand Lal Popli Vs DCIT (ITAT Chandigarh) - Nand Lal Popli Vs DCIT (ITAT Chandigarh) Assessing Officer, for making the impugned addition has started with the presumption that an amount to the extent of 92% of the gross receipts is the expenditure incurred by the assessee, which is a totally wrong premise. If the income component is estimated,...

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Section 44AD: Assessee need not explain individual entry of cash deposit in bank

Sri. Girish V.Yalakkishettar  Vs ITO (ITAT Bangalore) - Sri. Girish V.Yalakkishettar  Vs ITO (ITAT Bangalore) Section 44AD of the Act gives an option to the assessee to offer income on presumptive basis. These are special provisions. The assessee has opted for the same and offered to tax income at the rate of 8% of his turnover. The issue is whether, th...

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Additions towards undisclosed purchases/ expense etc. goes against spirit of section 44AD

Shri Thomas Eapen Vs ITO (ITAT Cochin) - Shri Thomas Eapen Vs ITO (ITAT Cochin) The assessee offered income u/s. 44AD, the assessee being a small trader in medicine. There is no dispute that the assessee falls under the provision of sec. 44AD since the turnover of the assessee is less than Rs. 1 crore from eligible business. The Assessing ...

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Asking to prove 92% of expense defeats purpose of presumptive taxation: ITAT Bangalore

Shri Kokkarne Prabhakara Vs. ITO (ITAT Bangalore) - Shri Kokkarne Prabhakara Vs. ITO (ITAT Bangalore) Asking the assessee to prove to the satisfaction of the Assessing Officer, the expenditure to the extent of 92% of gross receipts, would also defeat the purpose of presumptive taxation as provided under section 44AD of the Act or other such provision...

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Non filing of return | Section 44AD | Application of 8% Rate by AO justified

Unity Automation Solution Ltd. Vs ITO (ITAT Delhi) - The assessee company was in the business of Sale and Service of CCTV cameras and other security equipment’s. Total receipts for the year under consideration was Rs. 3,54,30,497/- and still they have not filed return under income tax....

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CBDT notifies more modes of e-payments; 6DD limit reduced to ₹ 10000

Notification No. 08/2020-Income-Tax [G.S.R. 56(E)] - (29/01/2020) - Notification No. 8/2020-Income-Tax- CBDT has notified Other electronic modes by inserting New Income TAx Rule 6ABBA. It also amended marginal heading of rule 6DD and in rule 6DD for the words ‘account payee bank draft, exceeds twenty thousand rupees’, the words, figures and letters ̵...

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CBDT extends return of Income / ITR Due date to 30.11.2014

F.No.153/53/2014-TPL (Pt.I) - (26/09/2014) - In compliance to the judgments of various High Courts and after considering the representations received for extension of the due date, the Board, in exercise of its power conferred by section 119 of the Act, has extended the 'due-date' for furnishing return of income from 30th September, 2014 to 30...

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CBDT Notifies new Form 3CA, 3CB & 3CD – Format of Tax Audit Report Revised

Notification No. 33/2014-Income Tax - (25/07/2014) - Notification No. 33/2014-Income Tax S.O. 1902 (E).. In exercise of the powers conferred by section 295 read with section 44AB of the Income Tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income Tax Rules, 1962, namely:- 1. (1)...

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Recent Posts in "Section 44AD"

Section 40A disallowance in case assessee opts for presumptive taxation u/s 44AD

Applicabilty of disallowance u/s 40A of the Act in case assessee opts for presumptive taxation u/s 44AD. Sec 40A relates to disallowance related to excess payment of related party, cash payment to a person in excess of Rs. 10,000 in a day, payment to unapproved fund, mark to market losses etc. The comparison of sec […]...

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Comprehensive analysis of Section 44AD & related aspects

Comprehensive analysis of Section 44AD with other related aspects The provisions of Section 44AD were introduced in the Chapter of Profits & Gains from Business or profession to reduce the compliance burden of resident small Taxpayers. Undoubtedly throughout, the concept related to “Presumptive Taxation Schemes’’ has been very w...

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Analysis of Form 3CA, Form 3CB and Form 3CD – Part 1

Article is first part of series of articles in which Author will Analyse Form 3CA, Form 3CB and Form 3CD related to Tax Audit under Income Tax Act, 1961- 1. Form  3CA – Audit Report under Section 44AB in a case where the accounts of the business or profession of a person have been audited […]...

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Critical analysis & issues in Tax Audit Report & OI Schedule

Critical issues in the tax audit report and the interplay of the form OI with the Tax audit report. Of late many assesses are receiving the intimations from the tax department for the mismatches in the tax audit report and the income tax return filing, however when one looks into the matter it is quote […]...

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Some special things related to Tax Audit

1. Tax Audit is mandatory if ‘business’ is having total sales, turnover or gross receipts more than Rs. 1 crore in any Previous Year (‘PY’). [Read clause (a) of Section 44AB of the Income Tax Act, 1961 (‘the IT Act’)]. 2. However, the aforesaid limit of Rs. 1 crore shall be read as 5 crores […]...

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Section 44AB vs Section 44AD

Section 44AD versus Section 44AB: What to choose ? As per recent amendments in Finance Act, 2020 where one of major amendment was made in Section 44AB by inserting a proviso to clause (a), which reads as follows:- Audit of accounts of certain persons carrying on business or profession. 44AB. Every person,— (a)  carrying on […]...

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Applicability of Tax Audit as per Finance Act, 2020 w.e.f. 01.04.2020

Pursuant to clause (a) of Section 44AB of the Income Tax Act, 1961 (‘the IT Act’), Tax Audit is mandatory if business is having total sales, turnover or gross receipts more than Rs. 1 crore in any Previous Year (‘PY’). Clause (a) of Section 44AB of the IT Act read as under- ‘(a) carrying on […]...

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Compulsion of Tax audit under clause (d) & (e) of section 44AB r.w. 44AD & 44ADA

Whether audit of accounts under clause (d) & (e) of section 44AB read with section 44AD & 44ADA of the IT Act is compulsory for an assessee? It is pertinent to mention that out of the total 5 (Five) conditions of compulsory audit of accounts of certain persons carrying on business or profession, under section […]...

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Critical Comparison & Analysis of Presumptive Tax provisions

CRITICAL COMPARISON AND ANALYSIS OF PRESUMPTIVE TAX PROVISIONS UNDER INCOME TAX ACT 1961 – 44AD, 44ADA & 44AE I. APPLICABILITY 1. Section 44AD clearly specifies the ‘Eligible Assessee’ as ‘all resident Individuals, HUFs, or Firms (excluding Limited Liability Partnership Firms)’ engaged in ‘Eligible Business’, which i...

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Business Loss? – Audit u/s 44AD or 44ADA Applicable or Not?

The recent CBDT circular on extension of due date for assessees required to get their accounts audited u/s 44AB has brought to light many things. Once such thing is the implication for assessees having having turnover less than Rs. 1 crore and having Net loss from business....

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Matrix for Tax Audit Under Section 44AB for A.Y.2020-21

Article contains Matrix for Tax Audit Requirement Under Section 44AB for A.Y.2020-21. Matrix has been prepared after considering provisions of section 44AB and 44AD for A.Y.2020-21...

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Key Issues In Presumptive Taxation under Income Tax

Presumptive taxation is being followed by the huge number of the small taxpayers throughout the country. However ironically they are of the opinion that the government has relieved them with all the provisions of the income tax act and therefore does not take into the consideration the relevant provisions of the income tax act and [&helli...

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Section 44AD Presumptive Scheme to be opted for at least 5 years?

Whether Presumptive Scheme under Section 44AD of IT Act, 1961 to be opted for at least 5 years? It is notable that a new condition has been added to Presumptive Income by Finance Act, 2016, w.e.f. 01.04.2017 by substituting sub-section (4) of Section 44AD of Income Tax Act, 1961 (‘the IT Act’). Sub Section (4) […]...

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Compulsory Maintenance of books of account under Income Tax

Maintenance of books of accounts by Professionals: Section 44AA of Income Tax Act and rule 6F of Income Tax rules deal with the provisions regarding maintenance of books of accounts under Income tax Act. As per section 44AA(1) read with rule 6F the persons carrying on any of the profession as mentioned below are required to maintain books...

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Section 44AD not obligates assessee to maintain books of account

Nand Lal Popli Vs DCIT (ITAT Chandigarh)

Nand Lal Popli Vs DCIT (ITAT Chandigarh) Assessing Officer, for making the impugned addition has started with the presumption that an amount to the extent of 92% of the gross receipts is the expenditure incurred by the assessee, which is a totally wrong premise. If the income component is estimated, how the expenditure component on [&hell...

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Section 44AD: Assessee need not explain individual entry of cash deposit in bank

Sri. Girish V.Yalakkishettar  Vs ITO (ITAT Bangalore)

Sri. Girish V.Yalakkishettar  Vs ITO (ITAT Bangalore) Section 44AD of the Act gives an option to the assessee to offer income on presumptive basis. These are special provisions. The assessee has opted for the same and offered to tax income at the rate of 8% of his turnover. The issue is whether, the Assessing Officer […]...

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Additions towards undisclosed purchases/ expense etc. goes against spirit of section 44AD

Shri Thomas Eapen Vs ITO (ITAT Cochin)

Shri Thomas Eapen Vs ITO (ITAT Cochin) The assessee offered income u/s. 44AD, the assessee being a small trader in medicine. There is no dispute that the assessee falls under the provision of sec. 44AD since the turnover of the assessee is less than Rs. 1 crore from eligible business. The Assessing Officer also accepted […]...

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Asking to prove 92% of expense defeats purpose of presumptive taxation: ITAT Bangalore

Shri Kokkarne Prabhakara Vs. ITO (ITAT Bangalore)

Shri Kokkarne Prabhakara Vs. ITO (ITAT Bangalore) Asking the assessee to prove to the satisfaction of the Assessing Officer, the expenditure to the extent of 92% of gross receipts, would also defeat the purpose of presumptive taxation as provided under section 44AD of the Act or other such provision. Since the scheme of presumptive taxati...

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Section 44AB vs 44AD – Presumptive Taxation (With Examples)

When we talk about Presumptive Taxation, then it automatically relates to Tax Audit under Income Tax Act, 1961. At professional as well as student level, I have seen students getting confused in Sections 44AB & 44AD because 44AB says about the limit of Rs. 1 crore and 5 crore while Section 44AD says about the limit […]...

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Income Tax Compliance / Information at A Glance

I have covered only relevant compliances/information useful for Small Manufacturer, Traders only through this article which includes TDS Rate, TDS Return, TDS Certificate and TDS payment due dates, Advance Tax due dates, Income Tax Return Due Dates, Penalty for Late Return Filing, Important Income Tax Deductions, Presumptive Taxation Sch...

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Surgical Strike on Cash Transactions

a) Legal Measure Applicable to Receipt of Money i. Section 13A : Exemption for certain income of political parties No donation exceeding Rs.2000 is received by such political party otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank […]...

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Presumptive Taxation under Income Tax Act, 1961

The Scheme: To provide relief to small taxpayers from tedious task of maintaining books of accounts and getting them audited, a presumptive taxation scheme is framed which allows the assessee to declare income at prescribed rates and pay tax thereon, thereby avoiding the tedious work of maintaining books of accounts and audit. Relevant Se...

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Tax Audit for A.Y. 2020-21 U/s. 44AB vis-à-vis 44AD / 44ADA

Tax Audit Applicability for A.Y. 2020-21 under Section 44AB vis-à-vis Section 44AD / Section 44ADA of the Income Tax Act, 1961 We have attempted to provide a compendious view of Tax Audit Applicability for A.Y. 2020-21 under Section 44AB vis-à-vis Section 44AD / Section 44ADA of the Income Tax Act, 1961. Tax Audit Applicability for [&he...

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Amendment in Section 44AB & applicability for AY 2020/21- Analysis

As per Section 44AB of the Income Tax Act, 1961, every person carrying on business is required to get his accounts audited , if his total sales, turnover or gross receipts in business exceeds Rs. 1 crore in the previous year. In case of a person carrying on profession, tax audit is required if his […]...

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Ashtavinayaka, what are the Astha Mahima of Tax Audit?

According to income tax law, for the financial year 2015-16, the businessmen whose annual turnover exceeds Rs.1 Crore and the professionals for example; doctors, engineers, advocates, etc. whose annual income exceeds Rs.25 lakhs will have to get their books audited....

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Tax Audit Under Section 44AB V/s. Section 44AD 

Article explains provision of Section 44AB and Section 44AD of Income Tax Act, 1961 with reference to Income Tax Audit. While presenting the Union Budget for 2020-21, the Finance Minister announced that currently, businesses having turnover of more than one crore rupees are required to get their books of accounts audited by an accountant....

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Section 44AD Linkage with Tax Audit under section 44AB updated by Finance Act, 2020

Critical Analysis of interrelation between Provisions of Section 44AD & Section 44AB along with other ancillary aspects of Income Tax Act, 1961 The provisions of Section 44AD was introduced in the Chapter of Profits & Gains from Business or profession with an objective to reduce the compliance burden of resident small Tax payers. ...

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Special Provisions for Computing Profits & Gains of Business on Presumptive Basis [Section 44AD]

Special Provisions For Computing Profits And Gains of Business On Presumptive Basis [Section 44AD] (1) Introduction: – To reduce the tax burden and to provide relief from tedious work to small tax assesses, the government of India has incorporated a scheme of presumptive taxation. Businesses adopting the presumptive taxation scheme ...

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Analysis of Recent Amendments in Sections 44AB & 44AD

The recent changes in sections 44AB and 44AD have left these sections quite convoluted. The turnover threshold limit to get books of accounts audited has also been increased to Rs. 5 Crores provided minimum criteria of digital transactions is satisfied. Moreover, certain scenarios which required an assessee to get his books of accounts au...

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Special Provisions for computing Profits & Gains of Business on Presumptive Basis ( Section 44AD )

Special Provisions for computing Profits and Gains Of Business on Presumptive Basis (Section 44AD) Eligible Business  The presumptive Taxation scheme under Section 44AD covers all small businesses with total turnover/gross receipts of up to ₹ 200 Lakh (Except the business of plying, hiring and leasing goods carriages covered under sect...

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Income Tax Law Relating To Cash Transactions

A number of new provisions have been introduced in the Income Tax Act from time to time to put restrictions on cash transactions as well as to incentivise the non-cash transactions. Cash transactions have always played a major role in the Indian Economy and consistently were responsible for generation and accumulation of Black Money. The ...

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Income Tax Provision for Doctors

Among the busiest of professionals, doctors have little time to learn about the latest tax law. Tax planning is often neglected in the crush of other obligations. Being India’s Top 10s income earners, they have need to give more attention to their financial planning and taxation. Here we are providing some necessary documentation and le...

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Presumptive Taxation | Section 44AD | Income Tax Act, 1961

Hello, in this post we will talk about the Presumptive Taxation under Section 44AD of the Income Tax Act, 1961. Businesses adopting the presumptive taxation scheme are not required to maintain regular books of account. They can declare the income at a prescribed rate. The Income-tax Act has framed the presumptive taxation scheme under se...

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E-Book- Know When to Say No to Cash Transactions -Income Tax Act

E-BOOK: KNOW WHEN TO SAY NO TO CASH TRANSACTIONS Article explain Restrictions on Cash Expenditure (Capital & Revenue),  Incentives to encourage cashless business transactions, Restrictions on Cash Loans, Deposits & Advances, Restrictions on Cash Transactions in Real Estate, Restrictions on Income Tax Deductions, Restrictions on C...

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Taxation of Cash Transactions under Income Tax Act, 1961

Cash transactions seldom leave any trail and has always been a facilitator of black money. Whereas, electronic transactions ensure a clear money trail and make it very difficult for tax evaders. Government, in this regard, has from time to time bought in various provisions in order to restrict/discourage cash transactions and incentivise...

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Non filing of return | Section 44AD | Application of 8% Rate by AO justified

Unity Automation Solution Ltd. Vs ITO (ITAT Delhi)

The assessee company was in the business of Sale and Service of CCTV cameras and other security equipment’s. Total receipts for the year under consideration was Rs. 3,54,30,497/- and still they have not filed return under income tax....

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Presumptive taxation- Section 44AD, 44ADA, 44AE

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. In this part you can gain knowledge about various provisions of the presumptive taxation scheme ...

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Practical Approach to Presumptive Taxation- E-Book

E-BOOK ON PRACTICAL APPROACH TO PRESUMPTIVE TAXATION This Article/ E-Book  explains Provisions of Section 44AB,  Provisions of Section 44AA , Provisions of Section 44AD of Income Tax Act, 1961,   Applicability of provisions of sec 44AA, 44AB and 44AD when turnover is up to Rs. 1 crore, Presumptive Taxation Scheme under Section 44ADA, ...

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Section 44AD Special provision for calculating presumptive profit for small or mid size business

In such situation, persons carrying on business being individual, HUF or partnership firm (other than LLP) have option to opt for presumptive taxation under section 44AD of the Income Tax Act, 1961. Accordingly, it is expected that voluminous income tax returns will be filed under this section for FY 2019-20 (AY 2020-21)....

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Order passed by AO against directions issued by Tribunal is not sustainable in law

Engineering Professional Co. Pvt. Ltd. Vs DCIT (Gujarat High Court)

Engineering Professional Co. Pvt. Ltd. Vs DCIT (Gujarat High Court) In the given case, Assessee has filed appeal before ITAT against the order passed by the A.O. u/s 44AD. With respect to that appeal ITAT passed the order and state that “the Assessee is directed to attend the assessment proceedings and justify its claim of […...

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Income Tax audit under section 44AB​: FAQs

​Articles deals with Income Tax Audit Provisions in India. It explains What is tax audit, objective of tax audit, who is compulsorily required to get his accounts audited, What are Form Nos. 3CA/3CB and 3CD, Due Date for Tax Audit, penalty for not getting the accounts audited as required by section 44AB....

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Presumptive Taxation Scheme- 25 Things You Must Know

As per sections 44AA of the Income-tax Act, 1961, a person engaged in business is required to maintain regular books of account under certain circumstances. To give relief to small taxpayers from this tedious work, the Income-tax Act has framed the presumptive taxation scheme under sections 44AD, sections 44ADA and sections 44AE....

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Income Tax Audit – Recent Changes & Key Areas

Income Tax Audit Focusing on Recent Changes and Key Areas with Practical Examples This Article explains the Provisions of Income Tax Audit governed by Section 44AB of Income Tax Act, 1961 including the recent amendments in Budget 2020. Income Tax Audit Meaning: Tax Audit is an audit which is made compulsory by Income Tax Act, […]...

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Interesting issues under Section 44AD, 44ADA and 44AE

To provide relief to small taxpayers from this tedious work, lawmakers framed Special provisions for computing profit and gains on presumptive basis under sections 44AD, 44ADA and 44AE. The taxpayer can declare his income at prescribed rates or higher than that....

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Section 44AD – Is it really a palpable transformation?

Recently, the Section 44AD has been revised and now it is applicable to all businesses instead of only to civil construction business. On the other outset, limit of tax audit u/s 44AB is increased to Rs. 60 lakh from earlier limit of Rs. 40 lakh. Being an entrepreneur first, I had lot of disappointments on increase of limit as now there w...

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Consequences of Non Filing of ITR

CBDT has vide its order dated 20.08.2014 extended the due date for e-filing of Tax Audit Report to 30.11.2014 for A.Y. 2014-15. The order has nowhere mentioned about the due date for e-filing of Income tax Return (ITR). It seems due date for filing of ITR are been kept same. If the Assessee who are covered under tax audit provisions but n...

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Presumptive Taxation : Section 44AD

For small businesses to comply with the taxation provisions without consuming much time and resources, the government of India has incorporated a scheme of presumptive taxation. Businesses adopting the presumptive taxation scheme are not required to maintain regular books of account. Section 44AD(1) says : “Notwithstanding anything to t...

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Tax Audit under Section 44AB

Tax Audit Meaning -A Tax Audit is an audit, made compulsory by the Income Tax Act, if the annual gross turnover/receipts of the assesse exceed the specified limit. Tax audit is conducted in Sec 44AB of the Income Tax Act,1961 by a Chartered Accountant. -Simply Tax Audit means, an audit of matters related to tax. […]...

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Common Mistakes In Declaring Business Income U/S 44AD In Income Tax

Individual, HUF and Partnership firm, whose annual turnover does not exceed Rs. 2 crores, are given an option to pay tax by declaring business income under presumptive basis i.e. minimum 8% of the business turnover shall be treated as the net profit and thereafter, the tax shall be payable as per the applicable tax rate […]...

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Tax Audit under Income Tax Act – Guide to Integrated effects of Section 44AB and 44AD

With times, the people search the loopholes in the laws and the lawmakers keep on plucking such loopholes. Such is also the fate of Tax Audit under the Income Tax Act in our country. The efforts of the government to maintain the right balance between the provisions make the tax compliances simple and inexpensive for […]...

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Applicability of Tax Audit under Income Tax for Assessment Year 2020-21

​In this article we tried to clear confusion for TAX AUDIT APPLICABILITY from AY 2020-21. Hope you all find it useful, Please give your valuable feedback. & do lt me know if any error. Thanks in advance. The finance Bill, 2020 has brought a major amendment to section 44AB of Income Tax Act, 1961. Moreover, […]...

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Tax Audit Applicability – After Budget 2020

A minor amendment in section can change the whole situation and scenario. The same was happened in sec 44AB in 2016 and now in 2020 budget. Before 2016, the turnover limit for sec 44AB and Sec 44AD were identical. Thereafter, in Budget 2016, the turnover limit for Sec 44AD has been raised to INR 2 […]...

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Practical issues in Presumptive Taxation – 44AD, 44ADA & 44AE

Under section 44AD from if the Turnover of an assessee being resident individual, HUF, Partnership Firm (not being a LLP) and who is not claiming deduction under section 10A, 10AA, 10B &10BA or deduction under Chapter VI A under the heading ‘C -Deductions in respect of certain Incomes and derives income from any business except...

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Analysis of Section 44AD with Section 44AB

Dear Tax professionals and students, many times you might have faced this question- Whether a particular case is covered under tax audit under Section 44AB of the Income Tax Act or can we claim the benefit of Section 44AD and file the income tax return on presumptive taxation method without conducting tax audit? To answer […]...

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CBDT notifies more modes of e-payments; 6DD limit reduced to ₹ 10000

Notification No. 08/2020-Income-Tax [G.S.R. 56(E)] (29/01/2020)

Notification No. 8/2020-Income-Tax- CBDT has notified Other electronic modes by inserting New Income TAx Rule 6ABBA. It also amended marginal heading of rule 6DD and in rule 6DD for the words ‘account payee bank draft, exceeds twenty thousand rupees’, the words, figures and letters ‘account payee bank draft or use of ele...

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Section 44AD Presumptive Income 6% / 8% -Practical Issues

Section 44AD in Income tax act is the presumptive income section under which prescribed percentage of turnover will be deemed as your income. Till AY 2016-17, prescribed percentage was 8%....

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Defective return notice to file B/S & P/L in Presumptive Income Cases

There are various sections in the Income Tax Act, 1961 (Act) e.g., 44AD, 44AE, 44ADA etc., (popularly known as Presumptive Income sections) according to which, the profits and gains from eligible / prescribed businesses / professions carried by the prescribed categories of assessee (known as eligible assessee) are required to be computed...

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Legal validity of newly inserted schedule in ITR-4 SUGAM of AY 2020-21?

Question on legal validity of newly inserted schedule in ITR-4 SUGAM of AY 2020-21 As we know, Schedule regarding ‘Financial Particulars of Business’ has been removed from ITR-4 SUGAM of AY 2020-21. And new schedule titled as ‘Particulars of Cash and Bank Transactions Relating to Presumptive Business’ has been inse...

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Section 44AD Profits and Gains of Business on Presumptive Basis

First we will discuss the business which has been eligible for scheme provided by section 44AD of income tax act, 1961. This scheme covers up almost all small businesses which has total turnover up to 200 lakh. Total turnover is the crux of this section. Here important is total gross turnover; gross turnover is before deducting any expens...

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Advance tax – Precaution is better than Cure!

Arjuna, If the income tax liability of any taxpayer is more than Rs 10000 in a financial year, then he is liable to pay such tax in installments during the year itself rather than paying this tax at the end of the year. This tax which is payable during the year is called as Advance Tax....

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Presumptive taxation for small businesses & professions

To reduce the burden of various compliances, Govt. has introduced a scheme of Presumptive Taxation under section 44AD, 44ADA and 44AE of the Income Tax Act 1961....

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Applicability of Tax Audit U/s 44AB

As we all know that the finance act 2017 which is applicable for the previous year 2017-18 has made an amendment in Section 44AB (Tax Audit) by inserting a new proviso which has made the applicability of this section completely different....

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Inconsistency between Section 44AB and Form 3CD Audit Report Utility

This article wishes to bring to the notice of the concerned authorities a major inconsistency that exist between the provisions of section 44 AB and the Audit Report Utility available in the Income Tax E filing website....

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Tax Audit Liability with reference to 5 Years restriction- Section 44AD

The section 44AD of the Income Tax Act contains special provisions for computing profits and gains of a business on presumptive basis. It is applicable in respect of eligible business / (es) carried by an eligible assessee....

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Tax Audit Under Income Tax Laws

As per the combined readings of provisions of sections 44AB, 44AD and 44ADA of the Income Tax Act, 1961, every person carrying a business whose turnover exceeds Rs.1Cr./ 2 Cr. (as the case may be), or carrying on a profession whose gross receipts exceed Rs. 50 Lakh in the relevant assessment year, must get his/her accounts audited....

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Section 44AD: Mere submission of Balance sheet not proves Maintenance of Books of Accounts

Mr. Pradeep Jain Vs ITO (ITAT Delhi)

Mr. Pradeep Jain Vs ITO (ITAT Delhi) The assessee has filed the return of income for assessment year under appeal declaring income of Rs.9,63,920/-, out of which, income was declared at Rs.9 lakhs under section 44AD of the I.T. Act, 1961. In subsequent A.Y. 2016-2017 also, assessee declared income under section 44AD of the I.T. […]...

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Section 44AD & 44ADA: Compulsory to maintain books of accounts U/s. 44AB?

There is general opinion that if an eligible assessee is opting for section 44AD and section 44ADA, he is not required to maintain books of accounts. The requirement to maintain books of accounts is governed by section 44AA of the Income Tax Act. As per section 44AD(1): Notwithstanding anything to the contrary contained in sections [&hell...

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SECTION 44AD- Whether it is compulsory to get books of accounts audited

It is general opinion regarding section 44AD that if turnover is less than 1 crore/ 50 lakhs, and claimed profit is less than 8%/6%, then one has to get its books of account audited. Before Finance Act, 2016 following conditions was mentioned u/s 44AD(5): “Notwithstanding anything contained in the foregoing provisions of this sectio...

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Income Tax on F&O Trading

Future and Options (F&O) Trading is a popular activity amongst taxpayers due to availability of  multiple online trading platforms. The Income Tax provisions on F&O trading need to be analysed carefully. Meaning of F&O Trading F&O Trading comprises of trading in futures and options. They are classified under Derivatives. ...

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Budget 2019: Prescription of other electronic mode of payments

There are various provisions in the Act which prohibit cash transactions and allow/encourage payment or receipt only through account payee cheque, account payee draft or electronic clearing system through a bank account. Section 13A of the Act requires a political party to receive donation exceeding rupees two thousand only through an acc...

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Posted Under: Income Tax |

Dear FM, Make Presumptive Income Tax Scheme & Dividend Taxation more Taxpayer friendly

Assessee cannot opt for ‘Presumptive Tax’ for six years (including the year in which he has come out of the scheme) , if he has not offered income under this scheme for consecutively for six years including the first year in which  he has opted for the scheme. Does it mean that if has opted for the scheme for six years consecutively,...

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Section 44AB vs 44AD- Tax Audit & Presumptive Taxation

When we talk about Presumptive Taxation, then it automatically relates to Tax Audit under Income Tax Act, 1961. At student level, I have seen students getting confused in Sections 44AB & 44AD because 44AB says about the limit of Rs. 1 crore while Section 44AD says about the limit of Rs. 2 crore. Don’t worry; […]...

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Gearing Up For Tax Audit 2018-19- Key Points to take care of

The Tax Audit in India relates its history back to year 1984 when it was introduced with a view to check the accuracy of the books of accounts which are infact the basis while assessing the income of the assesses belonging to business class. During past so many years a lot of changes have been […]...

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Income Tax Implication on Derivatives (Futures & options) Transaction & Intra-day trading

This article is about how trading in derivatives & Intra-day trading is to be treated under the Income tax. We will briefly discuss the following: 1. Basic understanding of the concept 2. Computation of income- F&O & Intra-day trading 3. Calculation of turnover- F&O 4. Set-off & Carry forward of losses 5. Applicability...

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A relook at Income Tax changes applicable for A.Y.2018-19 – Part 2

As said earlier, the scrutiny selection date is fast approaching for cases to be selected for the A.Y.2018-19 by 30th September, 2019. The Finance Act, 2017 has made a slew of changes in various heads of income.  Business incomes and Other incomes are the most toughest of all other sources that leads to additions, disallowances […...

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Presumptive income cannot be estimated U/s. 44AD for partners remuneration

Mr. A. Anandkumar Vs ACIT (ITAT Chennai)

Partners’ remuneration from firm should  not be subject to the application of presumptive interest rate under section 44AD as the same could not be construed as gross receipts or turnover of a business independently carried on by a partner. ...

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Conudrum of Section 44AD in Line with Section 44AB & 44AA 

When there is annual turnover in previous year exceeds 1 CR you need to be done with Audit as per section 44AB of Income tax Act 1961, Except when you have opted for Section 44AD (When turnover for the previous year up to 2CR) From above lines the provisions looks very clear but the confusion […]...

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Analysis of Section 44AD and Practical Cases

Analysis of Section 44AD Along with Apposite Provisions Of Income Tax Law And Practical Cases In this article, author will try to clarify the haze amidst different opinions and interpretations of the Section 44AD and apposite provisions of Income Tax law. This article will mainly focus on the throbbing aspects concerning provisions of Sec...

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Analysis of applicability of section 44AD, 44AB for (F&O) transactions

Applicability of 44AD and 44AB in case of Derivative (F&O) transactions: Para 5.14 of Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961 provides for method of calculating the turnover or gross receipts to ascertain whether tax audit will be applicable or not. The same is reproduced as under: Derivatives, future...

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Section 44AD of Income Tax Act, 1961 post amendment by finance act, 2016

All about Section 44AD of the Income Tax Act, 1961 post amendment by finance act, 2016: (More specifically post replacement of Sub-Section 4 and 5 of 44AD) Before going into the discussion, it is better to understand the gist of this section for the benefit of readers as per current position of the provision: Section […]...

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Section 44AD- A comprehensive coverage

SECTION 44AD Who is eligible to adopt Section 44AD? Section 44AD is a well-known presumptive taxation scheme available to individuals, HUF and partnership firms (not including limited liability partnerships) for declaring their income on a presumptive basis which is not less than 8% of total turnover declared for the financial year. Secti...

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Presumptive Taxation for Small Tax Payers in Business or Profession

Presumptive Taxation of Certain Eligible Businesses Or Professions Under The Income Tax Act 1961 1. What is presumptive Taxation? To give relief to small taxpayers from the tedious job of maintenance of books of account and getting the books of account audited, the Income tax Act has framed the Presumptive Taxation Scheme under sections 4...

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Section 44AD (Presumptive Taxation (AY 2018-19)

1. Applicability of Section 44AD  Any business which has a turnover of less than Rs. 2 crores can opt for presumptive taxation under this section. Following class of businesses are out of scope of Section 44AD. – Life Insurance Agents – Commission of any kind – Running the business of Plying, Hiring or leasing Goods […]...

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5 Things You Must Know About Tax Audit

CA Brijesh Baranwal 1. As per the provisions of section 44AB/44AD of the Income Tax Act, 1961, every person carrying a business whose turnover exceeds Rs.1Cr./ 2 Cr. (as the case may be) or carrying a profession whose receipts exceeds Rs. 50 Lakhs in the financial year 2017-2018, must get his accounts audited before filing […]...

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Quick Insight on sec 44AA, 44AB, 44AD – Presumptive Taxation

CA Tarannum Khatri Section 44AA: Maintenance of Books of Accounts WHO SHOULD MAINTAIN: Person  carrying on business / profession whose total income exceeds INR 1,20,000 in any one of the three years immediately preceding the previous year; In case of in case of individual or HUF provisions are applicable in case total income exceeds INR ...

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PPT on Presumptive Taxation under Income Tax Act

PRESUMPTIVE TAX INTRODUCTION Sections 44AD, 44ADA & 44AE Introduced to help small business men, Traders and Professionals i. Section 44AD – Small Business/Traders for Turnover up to Rs. 2 Crores ii. Section 44ADA – Professionals – Gross receipts up to Rs. 50 Lakhs iii. Section 44AE – Truck owners owning not more than 10 trucks...

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CPC advisory on applicability of Tax Audit to business and profession

Dear Taxpayer, As per the section 44AB of Income Tax Act, the books of accounts for the relevant previous year are required to be audited by a Chartered Accountant and the audit report has to be electronically filed prior to or along with the return of income before the due date. In order to assist to […]...

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Audit U/s. 44ADA not to be counted for Tax Audit Limit Calculation: ICAI

ICAI decided to exclude audit conducted under section 44ADA of Income-tax Act, 1961 for reckoning the specified number of tax audit assignments...

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Fine Tuning required for Presumptive Taxation- 44AD, 44ADA & 44AE

Once a taxpayer opts for this Scheme and files the returns of income for a  year and in the subsequent year if he declares lower income than the prescribed percentage then he shall not be eligible to claim the benefit of this section for the next five years and in addition if his total income […]...

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Presumptive Taxation Scheme Section 44AD, 44ADA & 44AE

The presumptive taxation scheme is framed under Three sections- Section 44AD and Section 44ADA & Section 44AE of the Income Tax Act, 1961. Person adopting presumptive taxation schemes are exempt from getting their books of account audited....

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Tax Audits and e-filing of Report

As per section 44AB of the Income tax act, certain persons are required to get their accounts audited till 30th September by the CA and furnish a report of such audit in the prescribed form duly verified and signed by the CA. ...

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Presumptive Taxation under Section 44AD and 44ADA

How to Pay Less Tax for Professionals and Small Businesses under Income Tax Act, Presumptive Taxation under Section 44AD and 44ADA Presumptive Taxation under 44AD There are small businessmen who are unable to keep and maintain books of accounts for various reasons, can opt for presumptive taxation and declare profits at 8% under section 4...

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Section 44ADA – Presumptive Tax Scheme for Professionals

Section 44ADA is inserted with effect from financial year 2016-17 and deals Special provision for computing profits and gains of profession on presumptive basis for 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....

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Tax Audit – Section 44AB – Applicability, Due Date, Forms & Penalty

A person covered u/s 44AD is required to get his books of account compulsorily audited u/s 44AB if such person claims that the profits and gains from the business are lower than the profits and gains computed in accordance with the provisions of section 44AD(1) and if his income exceeds the maximum amount which is not changeable to tax(i....

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Small Taxpayers- Avail benefits of Presumptive Taxation Scheme- CBDT

Small Taxpayers (Businesses&Professionals) should file their return on or before 31st july 2018 (Due date for filing Income Tax Return for A.Y. 2018-19). File Early Beat The Rush...

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Section 44AD: Presumptive Taxation for Business Income

Extract of Section – 44AD of Income-tax Act, 1961 Special provision for computing profits and gains of business on presumptive basis. 44AD. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the […]...

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Is Tax Audit Necessary in every case where Section 44AD is applicable but Net Profit is less than 8% / 6%

The Section 44AD of the Income Tax Act contains special provisions for computing profits and gains of a business on presumptive basis. According to this section the profits and gains from eligible businesses carried by an eligible assessee are required to be computed at least at the rate of 8% / 6% of the total turnover / gross receipts....

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Posted Under: Income Tax |

5 Year Restriction under Section 44AD of Income Tax Act, 1961

The Section 44AD of the Income Tax Act contains special provisions for computing profits and gains of a business on presumptive basis. According to this section the profits and gains from eligible businesses carried by an eligible assesse are required to be computed at least at the rate of 8% / 6% of the total turnover / gross receipts. H...

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Allow Benefit of presumptive taxation U/s. 44AD to LLP: ICAI

Section 44AD relating to presumptive taxation applies only to businesses run by residents Individual, HUF and Firms excluding LLP. Tax on presumptive basis should be extended to all assessees, including a LLP. Only section 44AD excludes LLP, for which there appears to be no cogent reason. Otherwise under the Act, a LLP and a Firm are tre...

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