Presumptive income

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2017 1. Person who are free lance journalist, tutor, instructor running hobby work shops, or contract employees - will they be covered under Trade/ business or Profession? Can they exercise option under 44AD or under 44ADA or not at all?
2.As per my understanding these persons are not covered as professionals as defined in sec 44AA. So if they are not professions, will they come under Trade and can be covered u/s 44AD?
3. Or are they covered neither under 44AD nor 44ADA and can not opt for presumptive income?
4..In case they can not opt for presumptive income, will they be required to maintain proper books of accounts, if their turn over exceeds 10 lakhs, and work out their income as per profit and loss account for ITR purpose?
5. If the profit so arrived at is less than 50% of gross receipts, or results in loss, will they be required to get tax audit done? Or audit will be required only if their gross exceeds 50 lakhs? Kindly advise

Amol S Joglekar

Amol S Joglekar (Expert)

04 July 2017 you can opt for 44AD. NO problem.... (But morally speaking it should go by 44ADA..... the activities you are mentioning are vocational, which in turn are near to profession than business....)

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

04 July 2017 1 They covered neither under 44AD nor 44ADA and can not opt for presumptive income.
2 They will be required to maintain proper books of accounts, if their turn over exceeds 10 lakhs, and work out their income as per profit and loss account for ITR purpose.
3 If the profit so arrived at is less than 50% of gross receipts, and income above basic exemption limit they will be required to get tax audit done.

Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2017 Mr. Seetharaman Sir, if they are not covered under 44AD or 44ADA, then why the restriction on 50% of gross receipts as profit for requirement of tax audit? This requirement is only in case 44ADA is applicable.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

05 July 2017 You are right this requirement is only in case 44ADA is applicable.

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