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Discussion > Income Tax > Others >

New Presumptive taxation u/s 44AD from AY 2011-12

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STUDENT Rajasthan

[ Scorecard : 2136]
Posted On 04 July 2011 at 11:25 Report Abuse

 

New Presumptive taxation u/s 44AD from AY 2011-12

 

A new section 44AD has been incorporated in the Income-tax Act to provide for special provisions for computing business profit on presumptive basis from the assessment year 2011-12. This section has been inserted to replace existing section 44AD and 44AF and this new section will be applicable to any business (whether it is retail trade or civil construction or any other business) except the business of plying, hiring or leasing goods carriages referred u/s 44AE.

The provisions of section 44AD will be applicable only if the following conditions are satisfied:

Eligible Assessee

The assessee should be an eligible assessee. Eligible assessee for this purpose is a person resident in India who is an Individual, a Hindu Undivided Family or a partnership  firm (not being a limited liability firm). The assessee has not claimed any deduction under sections 10A, 10AA, 10B, 10BA, 80HH to 80RRB in the relevant assessment year.

Eligible Business

The assessee should be engaged in any business except the business of plying, hiring or leasing goods carriages referred u/s 44AE.

Turnover

Total turnover or gross receipt in the previous year of the eligible business should not exceed an amount of rupees sixty lakhs.

Consequences if the above conditions are satisfied

If the above conditions are satisfied, the income from the eligible business is estimated at 8% of the gross receipt or total turnover.

Following points should be noted –

  • The assessee can voluntarily declare a higher income in his return.
  • All deductions under sections 30 to 38, including depreciation and unabsorbed depreciation, shall be assumed to have already been given full effect. No further deduction shall be allowed under these sections.
  • However, in the case of assessee being firm, the normal deduction in respect of salary and interest paid to the partners shall be allowed as deduction out of such presumptive income subject to conditions and limits specified in clause (b) of section 40.
  • The written down value of is calculated, where necessary, as if depreciation as applicable has been allowed. Moreover, it will be assumed that disallowance, if any, under sections 40, 40A and 43B has been considered while calculating the estimated income @ 8 %.
  • An assessee opting for the above scheme shall be exempted from payment of advance tax related to such business.
  • An assessee opting for the above scheme shall be exempted from maintenance of books of account related to such business as required under section 44AA.
  • When income is taxable at the rate of 8% as stated above, the concerned assessee is not under any obligation to explain individual entry of cash deposit in his bank, unless such entry has no nexus with the gross receipt.

Lower Income and consequences

A taxpayer can declare his income to be lower than the deemed profits and gains as stated above. The following consequences are applicable if the taxpayer declares his income which is lower than the deemed profits and gains as stated above –

  1. The taxpayer will have to maintain the books of account and other documents as required under section 44AA (irrespective of income or turnover) if his total income exceeds the exemption limit.
  2. The taxpayer will have to get his books of accounts audited and furnish a report of such audit under section 44AB (irrespective of income or turnover) if his total income exceeds the exemption limit.


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CA ADITYA SHARMA
CA IN PRACTICE

[ Scorecard : 16653]
Posted On 04 July 2011 at 11:46

very useful post. keep it up:)





Samir
ACA

[ Scorecard : 113]
Posted On 04 July 2011 at 12:39

Is this provision applicable to Professionals such as Advocates, Doctors, Consultants, Engineers, etc.?

 

Is this provision applicable to business such as Home Tuitions, Beauty Parlours, Hobby Classes, Retail Stores, etc.?

 

Can you specify list of business which can be covered under this section?

 

Thanks!.



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valji
Accounts manager-MBA

[ Scorecard : 2114]
Posted On 04 July 2011 at 12:54

thanks for information



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shaishav soni
CA final

[ Scorecard : 346]
Posted On 04 July 2011 at 13:29

thanks for sharing



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Aparna Raja K.C
Student

[ Scorecard : 515]
Posted On 04 July 2011 at 14:07

@ Samir - Good Question :-

The section <44AD> says that it is applicable to any business other thatn those under Section 44AE.
 So it is ought to be applicable to all the professions and business :)



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Member (Account Deleted)
CA Final

[ Scorecard : 1343]
Posted On 04 July 2011 at 18:07

Originally posted by : shaishav soni

thanks for sharing


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Rahi Naik
student

[ Scorecard : 180]
Posted On 04 July 2011 at 18:54

As per income tax business and professional are two different thinks .Sec 44AD apply only to business not professionals.thats y

Section 44AD is not applicable to the professionals i.e Doctors, Lawyers, engineers or architects, accountants etc.

kindly corrected me if i m worng



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BABY SEBASTIAN
Chartered Accountant

[ Scorecard : 30]
Posted On 04 July 2011 at 19:00

Originally posted by : Samir
Is this provision applicable to Professionals such as Advocates, Doctors, Consultants, Engineers, etc.?
 
Is this provision applicable to business such as Home Tuitions, Beauty Parlours, Hobby Classes, Retail Stores, etc.?
 
Can you specify list of business which can be covered under this section?
 
Thanks!.

1. Is this provision applicable to Professionals such as Advocates, Doctors, Consultants, Engineers, etc.?: No, It is applicable only for business and not for Professions. So Professionals cannot file returns u/s 44AD.(Please see definitions of business under section 2 (13) and profession u/s 2 (36).)

2. Is this provision applicable to business such as Home Tuitions, Beauty Parlours, Hobby Classes, Retail Stores, etc.?. Yes.

3. Can you specify list of business which can be covered under this section?: Almost all business except that covered under section 44AE. Insuance agents can take advantage of this provision.
 


 

 


 



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Anjani Kumar
Articles Training

[ Scorecard : 106]
Posted On 05 July 2011 at 09:05

As per my View this section will not applicable to PROFESSION

BCZ the section is clearly stating that, it will applicable to BUSINESS only

if am wrong plz clarify



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