Changing section from 44AD to 44ADA

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A client previously filed under Section 44ADA but now has boutique income eligible for Section 44AD from FY 2020-21 onwards. The question is whether they can switch to filing under 44AD or must continue with 44ADA. The advice given is that it is possible to switch to 44AD if it's applicable and 44ADA is not. Both sections can be used simultaneously for eligible business and professional incomes, provided tax audit thresholds are not exceeded.

DIVYESH JAIN

DIVYESH JAIN (Querist)

15 December 2021 Dear Sir,

One of my client was filing return under Section 44ADA till FY 2019-20 but from FY 2020-21 she has boutique income which is eligible for section 44AD.

Can her return now be filed under Section 44AD or she needs to continue filing under 44ADA only since in 2020 return was filed as a professional.

Please suggest what can be done.

Regards,
Divyesh Jain

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

15 December 2021 Yes, can be changed to 44AD, in case of 44ADA not applicable.

DIVYESH JAIN

DIVYESH JAIN (Querist)

15 December 2021 Thanks a lot for your reply

PARAS CHHAJED

PARAS CHHAJED

(Expert)

15 December 2021 For eligible business income, one can opt for s. 44AD and for professional income 44ADA. Both can be simultaneous. If there is non-eligible income u/s 44AD such as Commission etc. then one may opt for normal income for that not eligible business. If one has income eligible u/s 44E then it may also be there in a single return of income provided his turnover does not become liable o Tax Audit.

DIVYESH JAIN

DIVYESH JAIN (Querist)

15 December 2021 Thanks Parasji for your reply

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