Section 44AD: Income of Business 8% as per The Income Tax Act, 1961. Find Complete for Section 44AD. In this article you can find complete details for Section 44AD like - Introduction for Section 44AD, What is Section 44AD, What are the criteria for Section 44AD, How to Apply for Section 44AD, What if he declares income lower than 8%? and Examples for Section 44AD, Now you can scroll down below and Check complete details regarding "Section 44AD: Income of Business 8%"If you like this article then please like us on Facebook so that you can get our updates in future ……….and subscribe to our mailing list ” freely “
Section 44AD: Income of Business 8%
What are the criteria?:
- The assessee should be an eligible assessee. ( An eligible person is a resident individual or a resident HUF or a resident partnership firm.)
- He should not claim any deductions under section 10A, 10AA, 10B, 10BA, 80HH, 80RRB.
- His turnover/ gross receipts should not exceed Rs. 2 crore in the relevant financial year. (limit of Rs. 1 Crore has been increased to Rs. 2 Crore in Budget 2016. This revised limit would be applicable from Financial Year 2016-17 onwards.)
- He can be engaged in any business except for the following:
- Profession as refereed in section 44AA(1),
- Income in the nature of Commission or Brokerage,
- Agency business,
- Plying, hiring or leasing goods carriages.
Applicability of Section 44ADA person can opt for presumptive scheme under section 44AD
- Only applies in case of Individual, Partnership & HUF provided they are Resident in India.
- who is carrying his business and his total sales/turnover does not exceeds Rs. 2 crores and
- who is not claiming deductions under section 10A/10AA/10B/10BA or under sections 80HH to 80RRB in the relevant year and
- who is not carrying business of
- plying, hiring or leasing goods carriages referred to in sections 44AE.
- any agency business. and
- who is not earning income in the nature of commission or brokerage
Amendments in Budget 2020-2021
How to apply the above section?:
- His taxable income would be considered to be at least 8% of his total turnover/ gross receipts.
- He can voluntarily declare more income.
- He is not required to maintain books of accounts.
- The individual/HUF can submit ITR 4S which is quite easy as compared to ITR 4.
- He will not get any deductions under section 30 to 38. (Example: he cannot claim deduction in respect of depreciation as it is already deemed to be allowed.)
What if he declares income lower than 8%?:If he declares income lesser than 8% of his turnover/ gross receipts, irrespective of his turnover or income, he would be required to:
- Maintain books of accounts as per section 44A
- Get accounts audited under section 44AB.
- If Mr. Taxplanner has a total turnover/ Gross Receipts of Rs. 30 Lakhs & he is an eligible assessee, then he can consider at least 2.4 Lakhs (8% of Turnover/Gross Receipts) to be his Taxable income under section 44AD.
- If Mr. Chintalal has a total turnover/ Gross Receipts of Rs. 250 Lakhs & he is an eligible assessee, still he cannot compute his income under section 44AD as his turnover/ Gross Receipts exceeds the specified limit of Rs. 2 crore.