Quick Summary
Section 44AD of the Income Tax Act, 1961, provides a simplified method of taxation for eligible taxpayers who carry on small businesses. It allows them to declare a fixed percentage of their total turnover or gross receipts as income. This is called the presumptive way of taxation. The main objecti
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)
Buy CCI PRO Now
Already a PRO member? Login here for an ad-free experience.
Section 44AD provides a simplified method of taxation for eligible small businesses, allowing them to declare a fixed percentage of their total turnover or gross receipts as income, known as presumptive taxation.
Individuals, HUFs, and partnership firms (excluding LLPs) carrying on eligible businesses with a turnover or gross receipts not exceeding Rs. 2 crore or Rs. 3 crore are eligible.
Taxable income is presumed to be 8% of total turnover/gross receipts for cash receipts or 6% for bank receipts. If actual profits are lower, an audit may be required.
The turnover limit is Rs. 2 crore for businesses where cash receipts exceed 5% of the total turnover, and Rs. 3 crore if cash receipts are less than 5% of the total turnover.
Once you opt for the presumptive scheme under Section 44AD, you must continue to use it for the next five consecutive years. Failing to do so will make you ineligible for the scheme for the subsequent five years.
No, professionals like doctors, lawyers, engineers, and consultants are not eligible for Section 44AD; they are covered under Section 44ADA.
CAclubindia
