Computation of ITR

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This discussion clarifies the computation of Income Tax Return (ITR) under Section 44AD, focusing on the presumptive scheme. It explains how to categorise various payment types like cash, bank receipts, and TDS under the 6% and 8% rates, noting that cash receipts are generally taxed at 8% and bank receipts with TDS at 6%. Outstanding debtors are not considered turnover, and payments received after filing the return are treated as cash sales. The advice also covers advance payments for projects, stating they are considered gross receipts when the project is completed or the invoice is raised, whichever is earlier.

Elbin

Elbin (Querist)
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20 July 2023 U/s 44AD - Presumptive Scheme. How can we categorize payment rec'd in cash, Bank, tds & bad debts under 6% & 8% ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 July 2023 CASH TRADE RECEIPTS UNDER 8%
WHILE BANK RECEIPTS WITH TDS UNDER 6%.
DEBTORS RECEIPTS ARE NOT CONSIDERD UNDER TURNOVER.

Elbin

Elbin (Querist)
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20 July 2023 What about outstanding debtors ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 July 2023 If the amount received before filing relevant return by bank, then under 6%, otherwise treated under cash trade.

Elbin

Elbin (Querist)
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20 July 2023 & what if after filing the return the outstanding payment rec'd in digital payment ? Is there any provision we can make u/s 44AD ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 July 2023 By whatever mode you receive the amount after filing return; the transaction is being treated as 'cash sales' while filing return u/s. 44AD IT act.

Elbin

Elbin (Querist)
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20 July 2023 Thank u so much for clearing my doubt 😄

Message likes : 1 times

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 July 2023 You are welcome.

Elbin

Elbin (Querist)
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20 July 2023 Had one more query if any advance payment rec'd from client for project & the project gets delay due to some reasons for years. Should we treat as gross receipts in the same year u/s 44AD or when the project gets complete after raising the invoice

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 July 2023 When project get completed or invoice date, whichever earlier.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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14 September 2024 Good luck.

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