Can assessee opt for Sec 44AD and Sec 44AE together? - Part III

CA.R.S.KALRA | Last updated: 13 October 2021

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This article clarifies whether an assessee can claim the benefits of Section 44AD and Section 44AE concurrently. It explains that Section 44AE is not an 'eligible business' under Section 44AD(6), meaning they can be claimed together without affecting eligibility for Section 44AD. The article also delves into the definition of 'Total Turnover' or 'Gross Receipts' for calculating presumptive income, including the treatment of taxes like GST, and discusses the option for assessees to declare income higher than the presumptive rate.

Click here to read Part 1 - Presumptive Taxation Scheme u/s Section 44AD Click here to read Part 2 - Interplay of Section 43CA vs. Section 44AD Now a question arises that whether an assessee can take the benefit of sec 44AD and sec 44AE together. To resolve this issue when we have to see t

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FAQ :

Yes, an assessee can claim the benefits of Section 44AD and Section 44AE together. Section 44AE is not listed as an excluded business under Section 44AD(6), thus not making the assessee ineligible for Section 44AD.

For calculating 'Total Turnover' or 'Gross Receipts' under Section 44AD, reference is made to Sections 145 and 145A. It means the gross revenue received or to be received from sales or services, and according to Section 145A(ii), this should include amounts of any tax, duty, or cess collected, such as CGST/SGST/IGST.

Yes, Section 44AD(1) allows an assessee to declare a sum higher than the minimum 8% (or 6% for digital receipts) of the total turnover or gross receipts as their income. This is an option for the assessee, not an obligation, and the Assessing Officer cannot presume a higher income unless claimed by the assessee.

If the total turnover or gross receipts are received by an account payee cheque, account payee bank draft, through the electronic clearing system, or other prescribed electronic modes within the due date of filing the return, the presumptive tax rate is reduced to 6%.

Yes, payments received by crossed cheques are treated as cash payments and do not qualify for the lower presumptive tax rate of 6%. Only payments received via account payee cheques, drafts, or specified electronic modes are eligible for the 6% rate.