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Income from profession

KRISHNA MURARI LATH (PROPRIETOR) (36 Points)

12 April 2013

I have a tailoring bussiness for which I have gross receipt Rs. 10,00,000. My net profit is Rs. 75000 .

My question is

1. AM i eligible for 44AD

2. Do i need to maintain books of accounts

3. Do i need to get my accounts audited.

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3 Replies

sourav jain (INTERNAL AUDITOR) (128 Points)
Replied 12 April 2013

Income from tailoring job is not a income from profession so 44AD is applicable

If you want to claim lower amount of income i.e less than 80000 ( 8% of 1000000) than you have to maintain books of account and get your accounts audited u/s 44AB

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Dintakurthi Tirumala (CA FINAL) (15989 Points)
Replied 12 April 2013

Tailoring job considered as Business. So you are eligible for offering income u/s 44AD. According to this section you have to offer minimum income from business(tailoring) is Rs. 80,000. In case if you want to lower amount than it then you must and should be required to maintain regular books of accounts as well as if your gross total income exceeds basic exemption limit thenr equired to make tax audit u/s 44AB.

Thus for your case you are offering Rs. 75,000 i.e lower income than required minimu as per section 44AD so you required to maintain regular books of accounts. As well as if have any other heads of income and by adding such income to the above business income i.e to Rs.75,000 exceeding basic exemption limit i.e Rs. 2,00,000 for A.Y 2013-14 then you have to make tax audit.

For your understanding examples:

Case 1: You have only tailoring business and net profit from such business is Rs. 80,000 or more with the gross receipts of Rs. 1000000 and you didn't have any other sources or heads of income

Case 2: You have tailoring business and net profit from such business is Rs. 80,000 or more with the gross receipts of Rs. 1000000 and you also have other sources/heads of income is Rs.1,30,000

Case 3: You have tailoring business and net profit from such business is Rs. 75,000 or less than Rs.80,000 with the gross receipts of Rs. 10,00,000 and you didnt' have any other sources/heads of income

Case 4: You have tailoring business and net profit from such business is Rs.75,000 or less than Rs. 80,000 with the gross receipts of Rs.10,00,000 and you have other sources/heads of income of Rs. 100000

Case 5: You have tailoring business and net profit from Such business is Rs. 75,000 or less than Rs 80,000 with gross receipts of Rs. 10,00,000 and you have other sources/ heads of income of Rs. 1300000

Solutions:

Case 1: In this case your gross total income is Rs. 80,000 and however income is according to the section 44AD so you need not to maintain books of accounts as well as need not to make tax audit and can file your return u/s 44AD

Case 2: In this case your gross total income is Rs. 2,10,000 and however income from business is according to the section 44AD so you need not to maintain books of accounts as well as need not to make tax audit and can file your return u/s 44AD

Case 3: In this case your gross total income is Rs.75,000 and however income from business is lower than the minimum required as per section 44AD so required to maintain regular books of accounts but need not to make tax audit because of gross total income doesn't exceeded basic exemption limit

Case 4: In this case your gross total income is Rs.1,75,000 and however income from business is lower than the minimum required as per section 44AD so required to maintain regular books of accounts but need not to make tax audit because of gross total income doesn't exceeded basic exemption limit

Case 5: In this case your gross total income is Rs.2,05,000 and however income from business is lower than the minimum required as per section 44AD so required to maintain regular books of accounts as well as required to make tax audit because of gross total income exceededs basic exemption limit.

The above illustrations are regarding with the A.Y 2013-14.

So if your gross total income exceeds the basic exemption limit while computing taxable income then you required to make tax audit otherwise tax audit not required but must and should be required to maintain regular books of accounts still if you want to offer Rs.75,000 instead of Rs.80,000 or more as profit from business for tax purpose.

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