44AD

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A client filed income tax returns under Section 44AD for AY 2018-2019 and AY 2019-2020. For AY 2020-2021, they wish to file a regular return, opting out of Section 44AD, but intend to declare profits exceeding the presumptive rates. The consensus is that this is permissible, allowing for the declaration of higher profits without the need for maintaining detailed books of accounts, although continuing with 44AD and declaring more profit is also suggested.

Sriram

Sriram (Querist)
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27 October 2020 Hi Please tell anybody this doubt

My client was filed income tax return u/s 44AD for AY 2018-2019 & AY 2019-2020.

Now for AY 2020-2021 I want to file regular return without tax audit (i.e. not u/s 44ad) and i will show the profit more than 44ad calculation (i.e. more than 6% for other than cash sales and more than 8% for cash sales ) now i am declared the profit according to sec 44ad(1) in regular return.

is this eligible? correct or not?

I opt from 44ad before 5th year but i show the profit according to sec44ad(1) in the present year.

Please answer to this...

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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28 October 2020 Yes, this is eligible and correct. By continuing opting 44AD you can declare more profit as proposed, you will be relieved of maintaining books of accounts.

Sriram

Sriram (Querist)
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28 October 2020 sir i am not continued in 44ad i optout from 44ad in AY 2020-2021 and file the regular return without tax audit but i declare the profit more than as per 44ad calculation.

Sriram

Sriram (Querist)
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28 October 2020 this is right or wrong? Please clarify sir..

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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28 October 2020 This is right but I advise you to continue and declare more profit.

Sriram

Sriram (Querist)
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28 October 2020 Thank you sir for your suggestion...

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