CA.R.S.KALRA
Quick Summary
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 Click here to read Part 3 - Can assessee opt for Sec. 44AD and Sec. 44AE together? Click here to read Part 4 - Computation of Income under Section
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FAQ :
If an assessee's turnover exceeds ₹2 crore in a financial year, they become ineligible for Section 44AD(1) for that year. This ineligibility, due to exceeding the turnover limit, does not count as opting out by choice and therefore does not trigger the five-year restriction under Section 44AD(4).
Earning income from specified activities like commission or brokerage makes an assessee ineligible to opt for Section 44AD as per Section 44AD(6). This ineligibility, caused by operation of law rather than a personal choice, does not break the chain of Section 44AD for future years.
If an assessee voluntarily opts out of the presumptive taxation scheme under Section 44AD, they are generally barred from opting back into the scheme for the next five assessment years and must maintain books of accounts and get them audited.
If an assessee's turnover exceeds ₹2 crore, they fall outside the ambit of Section 44AD and are generally required to maintain books of accounts and may be liable for tax audit under Section 44AB.
Yes, if an assessee was ineligible for Section 44AD in a particular year due to earning commission income, and this was not a voluntary opt-out, they can opt for Section 44AD in subsequent assessment years, provided they meet the eligibility criteria.
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