15 June 2015
Yes he can show his return u/s 44AD i.e under presumptive income scheme in which he has to show minimum 8% net profit out of his gross receipts. Than he is not required to maintain his books of account. But his turnover should not exceed Rs. 1 crore. You may show 8% or more as net profit out of receipts from pathology services.But you cannot declare his income u/s 44AD if he derives commission income from ABC ltd. That is if ABC ltd. has shown commission income (TDS against section 194H) in his form 26AS than that income will be out of purview of section 44AD.
15 June 2015
If he is getting all the receipt from ABC ltd. only and he does not issue bills on his own account than all the gross receipts i.e. Rs. 8 lacs may be shown as his gross receipts u/s 44AD and a net profit of 8% or more may be shown. TDS of Rs. 80,000/- may be claimed. But I would like to know nature of his business is he also charging from customers? Please clarify in detail.
Further, Mr. A is running path. centre under Franchisee of ABC Ltd. Mr. A collects the payments from Customers directly. ABC Ltd raises the invoices to Mr. A and collects the payments from Mr. A.for his fees.
Example in detail-
Mr. A collects the payment from customer say for Rs. 500/-
Now, ABC will raise invoice to Mr. A as under-
MRP (500) Mr. A discount (200) Net Amount(300)
Now, Mr. A will pay cheque for Rs. 300/- to ABC Ltd and ABC will deduct TDS on 200/- Discount part
15 June 2015
OK thanks for detailed reply. Now I understood that fees collected from customers by Mr A on behalf of ABC and for that amount ABC issues invoices to Mr A. Mr A is sort of getting his professional fee for his franchisee services in the form of discount. Because net amount is paid to ABC. Out of that ABC deduct TDS. So in this case it is clear that Mr A is getting only professional fee, he is not billing in his individual capacity, running a franchise center for which he gets professional fee and TDS is also deducted. Therefore Mr A can file his return u/s 44AD showing entire receipts reflected in 26AS as his gross receipts and declare net profit of 8% or more. It is also clear that he is not getting any income from ABC as commission so he is eligible for 44AD.
He can show his income u/s 44AD. If he wants to declare 10%*8 Lacs, then 80,000 profit can be shown and accordingly nil tax will be payable ignoring other incomes.
Am i right Sir?
Thank you so much for your quick response and helping me.
15 June 2015
But if you are filing return under presumptive income scheme you may have to file either form 4S or form 4 in both these cases you will have to declare gross receipts, net profit, expenses, cash balance, debtors,creditors and stock if any.
15 June 2015
Yes no need to maintain books but as I said as per return form details regarding cash balance, debtors, creditors etc are required to be filled up even if no books are maintained.
25 June 2015
If discount receipt is on account of professional services or is commission income, then income can not be declared under sect. 44AD Only business income are eligible but not the professional. Income from commission is excluded as eligible business from sect. 44AD.
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