No account case

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 December 2010 One of my friend has income from Embroidery work. He doesnot maintain his books. Can he file his return under 'No account case', if yes then how should the income or profits be calculated to show under the head Profits & Gains of Business or Profession?
Also what is the limit for compulsory maintaining the books of accounts?
Please Reply ASAP.

Thanks

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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08 December 2010 Income will be 5% of previous year turnover.

If he wants lower profit margin , he has to mantain the books of accounts, otherwise up to 40 lakhs no requiremenbt of maintainance of books of accounts.

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2010 Thanks for your reply Shailesh Sir..but I am not clear on one thing.. that whether to calculate the turnover,he has to sum up his receipts books for the year & then figure out the income by calculating 5%on it.(eg. if the receipts for the year total Rs.3lac, then will his income for the year be 5%on 3lac i.e.Rs.15000/;) this is a small amount.

I am confused on this issue..Plz elaborate this point. His status is individual.
Can he file his return on Estimated basis?

Plz clarify..Thanks

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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04 August 2024 For an individual engaged in embroidery work who does not maintain books of accounts, here's how to handle the situation:

### Filing Return Under 'No Account Case'

#### **1. Eligibility for 'No Account Case':**
A taxpayer can file their return under the 'No Account Case' (Section 44AD) if they meet the following conditions:
- **Turnover:** The turnover of the business does not exceed ₹2 crore in a financial year.
- **Nature of Business:** The business does not fall under the categories that require mandatory maintenance of books of accounts.

#### **2. Calculation of Income:**

For businesses under Section 44AD, which allows for the presumptive taxation scheme, the following applies:

- **Presumptive Income Calculation:** The income is deemed to be 8% (or 6% for digital transactions) of the gross receipts/turnover. For embroidery work, this is considered a small-scale business where Section 44AD would apply, assuming the turnover is less than ₹2 crore.

**Example Calculation:**
- If the total receipts for the year amount to ₹3L, then the presumptive income would be:
- **Income = 8% of ₹3L = ₹24K**

This presumptive income is shown under the head "Profits and Gains of Business or Profession."

#### **3. Maintenance of Books of Accounts:**

- **Book Keeping Requirement:** Section 44AD allows for a simplified taxation method without maintaining detailed books of accounts. However, records of receipts and payments should still be kept for the sake of verification and compliance.

- **Compulsory Maintenance:** For taxpayers not availing of the presumptive taxation scheme under Section 44AD and whose turnover exceeds ₹2 crore, maintaining books of accounts as per Section 44AA is mandatory.

#### **4. Filing on Estimated Basis:**

- **Yes, you can file on an estimated basis** under Section 44AD if your turnover is below ₹2 crore. The income calculated at the prescribed percentage (8% or 6%) is deemed to be your taxable income. This method simplifies the process and reduces the burden of maintaining detailed books of accounts.

### Summary:

1. **Presumptive Income Calculation:** For a turnover of ₹3L, the presumptive income under Section 44AD would be ₹24,000 if using the 8% rate.
2. **No Need for Detailed Books:** You don’t need to maintain detailed books of accounts, but records of receipts and payments are advisable.
3. **File Return Under Presumptive Taxation:** You can file your income tax return under the presumptive taxation scheme (Section 44AD) and declare the calculated presumptive income.

Always ensure to keep records of all transactions and receipts, even if detailed books are not required. This practice helps in maintaining transparency and in case of any future scrutiny. For personalized advice and to ensure compliance with current regulations, consulting a tax professional is recommended.

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