44ad of income tax

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saikrishna (Querist)
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30 March 2014 I am Having Two Business one is Jewellery and the other Pawn broking.My jewellery business profit ratio is 3.63% and pawn broking business profit ratio is 10.68%.I am maintaining separate books of accounts for each business what is my income from business in concern with 44AD of Income tax act.
If my jewellery sales is 1950000 and Gross Interest Received in Pawnbroking is 650000.

saikrishna

saikrishna (Querist)
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30 March 2014 in jewellery business you have to offer 8% and in pawnbroking actual percent of profit.....

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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14 July 2024 Under Section 44AD of the Income Tax Act, businesses can opt for presumptive taxation where they declare income at a prescribed rate. Here’s how it applies to your situation where you have two businesses: jewellery and pawn broking.

### Calculation of Income under Section 44AD:

1. **Jewellery Business:**
- Presumptive income is calculated at 8% of total turnover.
- Turnover for jewellery business: Rs. 19,50,000
- Presumptive income from jewellery business = 8% of Rs. 19,50,000 = Rs. 1,56,000

2. **Pawn Broking Business:**
- For pawn broking, since the prescribed rate under Section 44AD is not defined specifically for pawn broking, you should consider the actual profit percentage.
- Profit ratio for pawn broking business: 10.68%
- Gross interest received from pawn broking: Rs. 6,50,000
- Presumptive income from pawn broking business = 10.68% of Rs. 6,50,000 = Rs. 69,420

### Total Presumptive Income:

- Total presumptive income under Section 44AD = Presumptive income from jewellery business + Presumptive income from pawn broking business
- Total presumptive income = Rs. 1,56,000 (Jewellery) + Rs. 69,420 (Pawn broking) = Rs. 2,25,420

### Conclusion:

Based on the above calculations:
- Your presumptive income under Section 44AD for the assessment year would be Rs. 2,25,420.
- This income is deemed to be your income from both the jewellery and pawn broking businesses for income tax purposes.

Ensure that you fulfill all other conditions under Section 44AD and maintain proper documentation to support the turnover and income declared. If you have any further questions or need clarification on any specific aspect, feel free to ask!

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