Presumptive Taxation Scheme Section 44AD - Part I

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

Save Share

Quick Summary

Section 44AD of the Income Tax Act provides a special scheme for computing profits and gains of eligible businesses on a presumptive basis. This means you can declare your income as a fixed percentage of your total turnover or gross receipts, simplifying tax calculations. For most businesses, this percentage is 8% (or 6% for digital receipts), provided your turnover doesn't exceed ₹2 crore. Opting for this scheme means most other deductions and expenses are considered already accounted for.

Special provision for computing profits and gains of business on presumptive basis 44AD. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross

Daily Limit Reached

You have reached your daily limit of 2 Free Articles

Subscribe to CCI PRO for unlimited access

Why Upgrade to CCI PRO?

No Ads
WhatsApp Broadcasts
Daily E-Newsletter
Unlimited Articles Access

BEST VALUE

2 YEAR PLAN

3,499

(Inclusive of GST)

1 YEAR PLAN

1,999

(Inclusive of GST)

View all CCI PRO benfits

Already a PRO member? Login here for an ad-free experience.

FAQ :

Section 44AD is a special provision in the Income Tax Act that allows eligible businesses to compute their profits and gains on a presumptive basis, simplifying tax compliance.

An eligible assessee is typically an individual, Hindu Undivided Family, or partnership firm (not an LLP) resident in India, who has not claimed certain deductions under specific sections like 10A, 10AA, 10B, 10BA, or Chapter VI-A in the relevant assessment year.

The total turnover or gross receipts in the previous year for an eligible business must not exceed ₹2 crore to be eligible for Section 44AD.

The presumptive profit is deemed to be 8% of the total turnover or gross receipts. However, if the receipts are through an account payee cheque, draft, or electronic clearing system, the rate is reduced to 6%.

No, if you opt for Section 44AD, any deductions allowable under Sections 30 to 38 are deemed to have been already given full effect, and no further deductions will be allowed.

Section 44AD does not apply to persons carrying on a profession, earning commission or brokerage, or engaged in any agency business. It also excludes businesses like plying, hiring, or leasing goods carriages (covered under Section 44AE).