How presumative assessment 9% of gross be done 17-18 assessm

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a k gupta (Querist)
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13 October 2016 FOR ASSESSMENT YEAR 2017-18

Sir, is reimbursements with different amount each month is also added as gross total receipt of a profession ?
Why travel exp and hotel bills reimbursed be included in gross receipts ?
If 50% of gross receipt is taxable than how 9% will apply ?
please reply.

a k gupta

a k gupta (Querist)
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13 October 2016 reply is awaited for the above .

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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28 July 2024 For Assessment Year 2017-18, presumptive taxation under Section 44ADA of the Income Tax Act is relevant for professionals who opt for the presumptive taxation scheme. This scheme is intended to simplify the taxation process for small professionals by allowing them to declare a fixed percentage of their gross receipts as taxable income. Here's a detailed breakdown of how this works and how reimbursements are treated:

### **1. **Understanding Presumptive Taxation under Section 44ADA**

**1.1. **Presumptive Scheme:**
- **Section 44ADA:** Allows professionals (such as accountants, doctors, and engineers) to declare 50% of their gross receipts as taxable income, provided their gross receipts do not exceed ₹50 lakhs in a financial year.

**1.2. **Taxation Rate:**
- **Presumptive Income:** Under Section 44ADA, 50% of the gross receipts are deemed as income, and you are required to pay tax on this amount. This is considered your presumptive income.

**1.3. **No Need for Detailed Books:**
- **Simplification:** If you opt for Section 44ADA, you do not need to maintain detailed books of accounts or get your accounts audited, as long as you comply with the scheme's conditions.

### **2. **Treatment of Reimbursements and Expenses**

**2.1. **Reimbursements:**
- **Gross Receipts:** Reimbursements related to travel, hotel bills, or other expenses, if reimbursed by a client, should be included in the gross receipts. This is because these reimbursements are considered part of the total amount received by the professional.

**2.2. **Travel and Hotel Bills:**
- **Inclusion in Gross Receipts:** If a client reimburses you for travel and hotel expenses, these amounts are included in your gross receipts as they form part of the total money received for your professional services.

### **3. **Calculation under Section 44ADA**

**3.1. **Gross Receipts:**
- **Include Reimbursements:** Calculate your gross receipts by including all amounts received, including reimbursements for expenses.

**3.2. **Presumptive Income Calculation:**
- **50% of Gross Receipts:** Under Section 44ADA, 50% of the gross receipts are considered your taxable income.

**3.3. **Example Calculation:**

Let's assume your gross receipts are ₹45 lakhs (including reimbursements):

1. **Total Gross Receipts:** ₹45L
2. **Presumptive Income:** 50% of ₹45L = ₹22.50L

Your taxable income under the presumptive scheme will be ₹22.50L, and you will need to pay tax on this amount.

### **4. **Common Questions**

**4.1. **Are All Receipts Included?**
- **Yes:** All receipts, including reimbursements, are included in the calculation of gross receipts.

**4.2. **Expenses under Presumptive Scheme:**
- **No Deduction for Expenses:** Under Section 44ADA, you do not need to separately account for individual expenses, as the scheme assumes that 50% of the gross receipts represent your income.

**4.3. **9% of Gross Receipts (Section 44AD vs. Section 44ADA):**
- **Section 44AD:** For businesses, a similar presumptive scheme under Section 44AD requires declaring 8% (or 6% for digital transactions) of the gross receipts as income.
- **Section 44ADA:** For professionals, the presumptive income is 50% of gross receipts, not 9% or 8%.

### **5. **Summary**

- **Gross Receipts Include:** All amounts received, including reimbursements for travel, hotel, etc.
- **Presumptive Income under 44ADA:** 50% of the gross receipts is considered taxable income.
- **No Need to Deduct Individual Expenses:** Under Section 44ADA, you do not deduct individual expenses from the gross receipts. Instead, you directly take 50% of the gross receipts as presumptive income.

If you need more detailed guidance or have specific issues related to your assessment, consulting a tax professional or accountant is highly recommended. They can provide tailored advice based on your individual situation and ensure compliance with tax laws.

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