Presumptive Taxation

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Altaf (Querist)
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08 April 2009 Sir / Madam,

Does catering & Decoration business is covered under presumptive taxation.

If yes, what is the section & what is the % of Income to be shown.

Thanks
Altaf

Altaf

Altaf (Querist)
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19 February 2010 Sir / Madam,

Does catering & Decoration business is covered under presumptive taxation.

If yes, what is the section & what is the % of Income to be shown.

Thanks
Altaf

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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10 August 2024 ### **Presumptive Taxation for Catering and Decoration Business

In India, presumptive taxation schemes simplify the process of calculating

**Presumptive Taxation for Catering and Decoration Businesses in India

In India, presumptive taxation schemes are

In India, presumptive taxation schemes can simplify the tax filing process for small businesses. However, not all types of businesses are covered under these schemes. For catering and decoration businesses, the relevant sections and applicability are as follows:

### **1. Section 44AD – Presumptive Taxation for Small Businesses**

#### **Applicability:**
- **Section 44AD** provides a presumptive taxation scheme for resident individuals, Hindu Undivided Families (HUFs), and partnership firms (other than LLPs) engaged in any business, other than those specified under sections 44AE and 44ADA.
- **Eligibility:** The gross receipts of the business must not exceed ₹2 crore in a financial year.

#### **Income Percentage:**
- **Presumptive Income Rate:** Under Section 44AD, the presumptive income is deemed to be 8% of the gross receipts.

#### **Relevance to Catering and Decoration:**
- **Catering Business:** A catering business can opt for the presumptive taxation scheme under Section 44AD if it meets the eligibility criteria, including the gross receipt limit.
- **Decoration Business:** Similarly, a decoration business can also opt for Section 44AD if it falls within the prescribed gross receipt limits and is not explicitly excluded.

**Example for Catering and Decoration Business:**
If the gross receipts from the catering or decoration business amount to ₹50 lakhs, under Section 44AD, the presumptive income would be calculated as 8% of ₹50 lakhs, which equals ₹4 lakhs.

### **2. Section 44ADA – Presumptive Taxation for Professionals**

#### **Applicability:**
- **Section 44ADA** is applicable to professionals (e.g., accountancy, interior decoration) whose gross receipts do not exceed ₹50 lakh in a financial year.
- **Eligibility:** It specifically applies to professionals who are engaged in professions referred to in section 44AA(1), which includes interior decoration.

#### **Income Percentage:**
- **Presumptive Income Rate:** Under Section 44ADA, the presumptive income is deemed to be 50% of the gross receipts.

#### **Relevance to Catering and Decoration:**
- **Decoration Business:** If a decoration business falls under the category of interior decoration and has gross receipts up to ₹50 lakh, it can opt for Section 44ADA. In this case, the presumptive income would be 50% of the gross receipts.

**Example for Decoration Business under Section 44ADA:**
If the gross receipts from the decoration business amount to ₹40 lakhs, under Section 44ADA, the presumptive income would be 50% of ₹40 lakhs, which equals ₹20 lakhs.

### **Summary**

- **For Catering Business:** Section 44AD is applicable if the gross receipts do not exceed ₹2 crore, with presumptive income deemed at 8% of the gross receipts.
- **For Decoration Business:**
- **Under Section 44AD:** If gross receipts exceed ₹50 lakh but not ₹2 crore, the presumptive income is 8%.
- **Under Section 44ADA:** If gross receipts are up to ₹50 lakh and the business qualifies as an interior decoration profession, the presumptive income is 50% of the gross receipts.

### **Practical Steps**

1. **Assess Eligibility:** Verify if the gross receipts of your business fall within the limits specified in either Section 44AD or 44ADA.
2. **Opt for Presumptive Scheme:** Choose the appropriate section based on the nature of your business and gross receipts.
3. **Maintain Records:** Even under presumptive taxation, maintaining proper records of your income and expenses is essential.
4. **File Returns:** Opt for the presumptive taxation scheme in your tax returns and declare the presumptive income accordingly.

For personalized advice and compliance, consulting with a tax professional or accountant is recommended to ensure accurate application of the presumptive taxation schemes.

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