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44ad for professional

11 March 2016

44AD applicable for professionals upto 50L revenue. Not required to maintain books of accounts . Offer 50% as net Income from profession.

Does this include Service tax.... ?

Not to maintain books -- does it means that profit can be higher and no need to show expense and actual cash flow can be higher ...?

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8 Replies

CA Karan Sathe (CA ) (564 Points)
Replied 11 March 2016

boss u r ca . SECTION 44AD is not applicable to Professionals

CA. Roopali Kadam (Jobs on assignment basis.) (1453 Points)
Replied 11 March 2016

Nihir sir

that's sec 44ADA

50Lacs Gross total receipts, I think that includes STax

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 11 March 2016

Yes, Budget 2016 enable Professionals to offer for Presumptive Income u/s.44ADA @ 50% of Gross Receipts as Presumptive Income

The definition of Gross Total Receipts may include Service tax you collected from clients. Generally it depends upon the way you treat Service tax in your books of account. If you make entry in your books of account as Cash a/c Dr To Service Fee, To Service tax Payable then the definition of Gross receipts does not include Service tax and if entry is Cash a/c Dr To Service Fee, To Service tax (Grouping Under Income) then You have to consider Service tax for Gross Receipts Purpose. In my opinion, Contention of Not to include Service tax may not be supported by Assessing officer. A.O may link it to Section 145A (even it relates to Purchase,Sale and Closing Stock Valuation for tax purposes) saying that as per Section 145A, Purchase, Sale and Closing stock for Tax purposes shall include all taxes irrespective of fact that you can later avail Tax paid on Inputs can be availed as Cenvat Credit.

CA Rohan jain (Sole Proprietor) (929 Points)
Replied 11 March 2016

Same concept as of sales tax to be incredible in turnover or not for section 44AD.. Same principle you apply for service tax for section 44ADA

srikumar (audit staff) (1203 Points)
Replied 11 March 2016

Service Tax collection Is liability, so not included in gross receipts, entry is Cash/bank account dr To service tax collection account To professional income account

CA Fenil H. Doshi (-) (50 Points)
Replied 12 March 2016

Service tax is not to be included in Gross receipts. We have judgements for the same. Yes It is u/s 44ADA, But the same section does not exempt the professional from maintaining books of accounts. You may refer S. 44AA which mandates the assessee to maintain books of accounts. For businss the same section has provision that tells that assessee need not maintain books. But the same does not include assessees declaring income under 44ADA. Thus even though professionals declare Income under 44ADA, it is still mandatory to maintain books. This is simply because 44AA is not ammended.