Sec 44 ad
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
23 November 2011
Assessee (other than co and llp)having income exceeding basic exemption and having T/O / SALES/Gross receipts lessthan 60 lakhs and filing return of income after 30 sept 2011,
what are the options he has ?
1.file Return of income with income greater than equal 8% on sales/turnover/gross receipts
or
2.file return of income with income asper P/L a/c
or
3.get books of a/c audited and filing return of income
secondly
Can a general insurance agent earning gross commission of 3 lakhs declare 8%
income on 3 lakhs u/s 44AD and file Return of income?
what are the options he has ?
1.file Return of income with income greater than equal 8% on sales/turnover/gross receipts
or
2.file return of income with income asper P/L a/c
or
3.get books of a/c audited and filing return of income
secondly
Can a general insurance agent earning gross commission of 3 lakhs declare 8%
income on 3 lakhs u/s 44AD and file Return of income?
23 November 2011
>File ROI @8% and No Need of auditing.
>File ROI as Real Income Less Than 8%, No Need of Auditing.
>For Professinals Insurance Agent 44AD Not Applicable.
>File ROI as Real Income Less Than 8%, No Need of Auditing.
>For Professinals Insurance Agent 44AD Not Applicable.
Querist : Anonymous
Querist :
Anonymous
(Querist)
23 November 2011
Dear ayush agarwal
Thank you for the reply.Is Insurance agent
professional?
kindly clarify.
Secondly,
KGN is a fruit merchant and earned a commission of Rs.8.65 lakhs on commission sales of fruits.He did not maintain any accounts.Can he file his return of income
u/s 44AD.? Further his commission sales are lessthan 60lakhs.
Thank you for the reply.Is Insurance agent
professional?
kindly clarify.
Secondly,
KGN is a fruit merchant and earned a commission of Rs.8.65 lakhs on commission sales of fruits.He did not maintain any accounts.Can he file his return of income
u/s 44AD.? Further his commission sales are lessthan 60lakhs.
23 July 2025
### **Section 44AD - Presumptive Taxation for Small Businesses**
Under **Section 44AD**, a **presumptive taxation scheme** is available for **small businesses** that meet the following criteria:
* **Turnover** or **gross receipts** must be **less than Rs. 2 crore** (threshold increased to Rs. 2 crore from FY 2020-21 onwards).
* The assessee can declare **8% of the turnover/gross receipts** (or **6% for digital transactions**) as income, and no detailed accounting or audit is required.
* This scheme applies to businesses that are **not professionals** as per the Income Tax Act.
---
### **Addressing Your Queries**
#### **1. Assessee with Turnover Less Than Rs. 60 Lakhs - Filing Return Options**
If an assessee (other than a company or LLP) has turnover less than **Rs. 60 lakh** and income **exceeding the basic exemption limit**, they have the following options for filing their return:
1. **File Return of Income with 8% Income on Turnover/Gross Receipts (Section 44AD):**
* If the assessee’s **turnover/gross receipts** is **less than Rs. 2 crore**, they can opt for **presumptive taxation under Section 44AD**, declaring **8% of the turnover/gross receipts** as income (or 6% for digital payments).
* **No audit** or detailed accounting is required.
2. **File Return Based on Actual Income (As per P\&L Account):**
* If the assessee decides not to opt for **Section 44AD**, they can file the return based on the actual **income as per the Profit & Loss account**.
* If turnover exceeds **Rs. 1 crore**, a **tax audit under Section 44AB** would be mandatory.
3. **Get Books of Accounts Audited and File Return:**
* If the assessee’s actual income does not match the presumptive scheme or they prefer declaring their actual income, they must **maintain books of accounts** and undergo an **audit** if turnover exceeds Rs. 1 crore, as per **Section 44AB**.
---
#### **2. Can a General Insurance Agent Declare 8% Income under Section 44AD?**
* **General insurance agents** are considered to be in a **profession** rather than a business. **Section 44AD** does **not apply** to professionals.
* For **professionals** (like doctors, lawyers, insurance agents), **Section 44AA** and **Section 44AB** apply instead of Section 44AD.
* **Insurance agents** are required to declare their actual income (as per their commission or gross receipts) and maintain books if their income exceeds Rs. 50 lakh. If their gross receipts exceed Rs. 50 lakh, they are required to undergo **tax audit** under **Section 44AB**.
So, **Section 44AD** is **not applicable** for an **insurance agent**, regardless of their commission earnings.
---
#### **3. KGN - Fruit Merchant with Rs. 8.65 Lakhs Commission Sales**
* Since **KGN** is a **fruit merchant**, they can **opt for Section 44AD**, as it applies to small businesses with a **turnover of less than Rs. 2 crore**.
* If **KGN's turnover** is **below Rs. 60 lakhs**, they can file the return of income with **8% of the turnover** as income under **Section 44AD**, provided:
* The turnover is from **business** (not from **profession**).
* No need to maintain detailed books of accounts or undergo audit under this scheme.
---
### **Summary:**
1. If an assessee’s **turnover is less than Rs. 2 crore** and the business qualifies, they can file under **Section 44AD**, declaring **8% income**.
2. A **general insurance agent** cannot file under **Section 44AD**, as it is meant for businesses, not professionals.
3. A **fruit merchant** earning **Rs. 8.65 lakh commission** can opt for **Section 44AD** provided the total turnover is **less than Rs. 2 crore** and they are in business, not profession.
Let me know if you need more clarification on any point!
Under **Section 44AD**, a **presumptive taxation scheme** is available for **small businesses** that meet the following criteria:
* **Turnover** or **gross receipts** must be **less than Rs. 2 crore** (threshold increased to Rs. 2 crore from FY 2020-21 onwards).
* The assessee can declare **8% of the turnover/gross receipts** (or **6% for digital transactions**) as income, and no detailed accounting or audit is required.
* This scheme applies to businesses that are **not professionals** as per the Income Tax Act.
---
### **Addressing Your Queries**
#### **1. Assessee with Turnover Less Than Rs. 60 Lakhs - Filing Return Options**
If an assessee (other than a company or LLP) has turnover less than **Rs. 60 lakh** and income **exceeding the basic exemption limit**, they have the following options for filing their return:
1. **File Return of Income with 8% Income on Turnover/Gross Receipts (Section 44AD):**
* If the assessee’s **turnover/gross receipts** is **less than Rs. 2 crore**, they can opt for **presumptive taxation under Section 44AD**, declaring **8% of the turnover/gross receipts** as income (or 6% for digital payments).
* **No audit** or detailed accounting is required.
2. **File Return Based on Actual Income (As per P\&L Account):**
* If the assessee decides not to opt for **Section 44AD**, they can file the return based on the actual **income as per the Profit & Loss account**.
* If turnover exceeds **Rs. 1 crore**, a **tax audit under Section 44AB** would be mandatory.
3. **Get Books of Accounts Audited and File Return:**
* If the assessee’s actual income does not match the presumptive scheme or they prefer declaring their actual income, they must **maintain books of accounts** and undergo an **audit** if turnover exceeds Rs. 1 crore, as per **Section 44AB**.
---
#### **2. Can a General Insurance Agent Declare 8% Income under Section 44AD?**
* **General insurance agents** are considered to be in a **profession** rather than a business. **Section 44AD** does **not apply** to professionals.
* For **professionals** (like doctors, lawyers, insurance agents), **Section 44AA** and **Section 44AB** apply instead of Section 44AD.
* **Insurance agents** are required to declare their actual income (as per their commission or gross receipts) and maintain books if their income exceeds Rs. 50 lakh. If their gross receipts exceed Rs. 50 lakh, they are required to undergo **tax audit** under **Section 44AB**.
So, **Section 44AD** is **not applicable** for an **insurance agent**, regardless of their commission earnings.
---
#### **3. KGN - Fruit Merchant with Rs. 8.65 Lakhs Commission Sales**
* Since **KGN** is a **fruit merchant**, they can **opt for Section 44AD**, as it applies to small businesses with a **turnover of less than Rs. 2 crore**.
* If **KGN's turnover** is **below Rs. 60 lakhs**, they can file the return of income with **8% of the turnover** as income under **Section 44AD**, provided:
* The turnover is from **business** (not from **profession**).
* No need to maintain detailed books of accounts or undergo audit under this scheme.
---
### **Summary:**
1. If an assessee’s **turnover is less than Rs. 2 crore** and the business qualifies, they can file under **Section 44AD**, declaring **8% income**.
2. A **general insurance agent** cannot file under **Section 44AD**, as it is meant for businesses, not professionals.
3. A **fruit merchant** earning **Rs. 8.65 lakh commission** can opt for **Section 44AD** provided the total turnover is **less than Rs. 2 crore** and they are in business, not profession.
Let me know if you need more clarification on any point!
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