Presumptive taxation u/s 44AD

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This discussion clarifies the applicability of presumptive taxation under Section 44AD for a trader with a turnover of Rs. 15 lakhs. Despite total income exceeding the basic exemption limit, the assessee can declare profit at the presumptive rates (8% or 6%) without needing to get their books of accounts audited, provided they disclose the minimum profit as per the section. Income from other sources, like partnership interest and salary, is taxed separately.

Prasad Rao

Prasad Rao (Querist)
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21 May 2020 An assessee is having turnover in trading activity of Rs. 15 lakhs in financial year 2019-20 and total income is around Rs. 25 lakhs which includes income received from partnership firm as a partner in the form of interest and salary.
Whether the assessee can declare profit @8%/6% in respect of trading activity and file the return of income without getting books of accounts audited or
Whether the assessee has to get his books of accounts audited as total income exceeds basic exemption limit as said in 44AD(5)?
The assessee had declared 8% in past financial year.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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21 May 2020 No need of tax audit in view of declaration of profit 8%/6%.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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21 May 2020 You can declare income under 44 AD FOR trading income of 1500000/ @ 8% or 6%_ rest you rest interst and salary from firm considered taxable income

c.bakshi

c.bakshi (Expert)
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22 May 2020 first, you have to disclose minimum 8% or 6% profit whereas there is no limit on maximum. So, agree with CA R SEETHARAMAN, yes audit is not applicable on you
secondly, as per section 10 (2), the money received as appropriation of profit is not included in your taxable income.

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