Educational Consultant/Advisor - under Section 44AD

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This discussion explores whether an educational consultant, whose services are subject to TDS under Section 194J, can file their Income Tax Return (ITR) using the presumptive income scheme under Section 44AD. While some argue 44AD is not applicable for consultancy services covered by 194J, others suggest it might be possible if the profession isn't explicitly listed under Section 44AA(1). Section 44ADA is also presented as a potential alternative, though the definition of 'technical consultancy' can be broad. Ultimately, the applicability of 44AD or 44ADA depends heavily on the specific nature of the consultancy provided, with potential risks of scrutiny from the CPC if 44AD is chosen.

Beena Agarwal

Beena Agarwal (Querist)
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31 July 2024 Please clarify that I am working as an Advisor in a school and giving my consultancy services there and they pay after TDS u/s. 194J, whether I would be able to file ITR under the presumptive income scheme or not i.e. is Section 44AD applicable...?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 August 2024 Section 44AD not applicable for consultancy services for which TDS deducted under section 194J.

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CA Puja Sharma

CA Puja Sharma (Expert)
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01 August 2024 44AD do not cover income where TDS deducted u/s 194J.
You can look into 44ADA or you have to pepare books of accounts.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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02 August 2024 well I would like to disagree. 194J only establishes that the tds is deducted against a professional fee. That does not establish that the payment was for the professions covered under 44AA(1). Income tax utility itself provide for certain professions to be covered under 44AD.

So, if you income is not from the professions covered by 44AA(1), you can still claim 44AD benefits.

CA ANILKUMAR B.COM FCA DISA

CA ANILKUMAR B.COM FCA DISA (Expert)
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03 August 2024 It is not clear what type of consultancy service you have provided. Only specified profession can be declared under Sec 44ADA. But Asper Sec 44AA(1), specified profession includes "Technical Consultancy" also. But the word Technical consultancy is not defined. But asper Sec 9, Technical service to include any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head Salaries.

Based on the above , if your service fit in this , you may show your income under presumptive tax-44ADA for a safer side, because if you declare income under 44AD, there may be chances of defect in return filed since TDS is deducted under Sec 194J. On the other hand , you can also declare the income under Sec 44AD and offer a less percentage. But chances are there to get a notice from CPC. In such situation you will have to defend by taking appropriate provisions in the Income Tax. So the advice depends on the nature of Consultancy you provided.

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