Section 44 ad
This query is : Resolved
10 September 2011
want to know abt section 44AD.
One proprietorship firm paying quarterly tax around 8000 Rs. Its turnover is less than 10 lakh per annum. someone advise it to pay 8% of total profit and no other formalities.
Please guide.
One proprietorship firm paying quarterly tax around 8000 Rs. Its turnover is less than 10 lakh per annum. someone advise it to pay 8% of total profit and no other formalities.
Please guide.
10 September 2011
If the firm is carrying out specified business as mentioned in Section 44AD then you can show income @ 8% of the turnover and pay tax accordingly to the applicable slab rates.
Further the section is not applicable to professional firms.
Further the section is not applicable to professional firms.
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10 September 2011
Tax quantum is not criteria for Tax Audit.If you have not specified profession need not to make audit.But you may maintain Books of account, though it is compulsory if net income more than 8% of Gross income.If your addition in Capital is not as equal 8%,show more than 8 % profit which creates your proper wealth.It is not rule that profit must be equal 8%, it may be higher.Consider Personal Withdrawals.
24 December 2011
can real estate commission agents opt for section 44AD?
23 July 2025
Great set of questions! Let's break this down clearly and directly:
---
## 🔷 What is Section 44AD (Presumptive Taxation Scheme)?
**Section 44AD** allows **eligible businesses** to declare income at **8% (or 6%)** of total turnover or gross receipts, and **avoid maintaining books of accounts and getting tax audit** done — subject to certain conditions.
---
## ✅ Basic Conditions to Opt for Section 44AD:
| Condition | Description |
| ------------------ | -------------------------------------------------------------------------------- |
| Eligible Assessee | **Resident individual**, **HUF**, or **partnership firm** (excluding LLP) |
| Nature of Business | Any **eligible business** (not profession, not commission/brokerage, not agency) |
| Turnover Limit | **Up to ₹2 crore** in a financial year |
| Presumptive Rate | 8% of turnover (6% if receipts are via digital mode) |
---
## 🔴 Not Eligible Under Section 44AD:
1. **Professionals** covered under **Section 44AA(1)** — e.g., CA, doctors, lawyers, etc.
2. **Agency business**
3. **Commission or brokerage income**
4. **Non-resident taxpayers**
5. **LLPs**
---
## ❌ Can **real estate commission agents** opt for Section 44AD?
👉 **NO**, real estate commission agents **cannot** opt for Section 44AD.
> ❗ Because they earn income through **commission/brokerage**, which is **specifically excluded** from the scope of Section 44AD.
📜 **Reference**:
Section 44AD(6) says this section **shall not apply** to:
* a person carrying on **agency business**, or
* a person earning income in the nature of **commission or brokerage**
➡️ Real estate agents clearly fall into **commission/brokerage** category — so **Section 44AD is not available**.
---
## ✅ What can real estate agents do then?
They must:
* Maintain **books of account** as per **Section 44AA**
* File ITR under **normal provisions (ITR-3)**, and
* Go for **tax audit if turnover exceeds ₹10 lakh and net profit < ₹1.2 lakh** (as per new threshold rules), or other audit limits
---
## 📌 Summary:
| Topic | Answer |
| ---------------------------------------------------- | ------------------------------------------------------------------------- |
| Can a real estate commission agent opt for Sec 44AD? | ❌ **No** |
| Why not? | Income is **commission-based**, which is **excluded** under 44AD(6) |
| What should they do? | File ITR-3 under **normal provisions** and maintain **books of accounts** |
---
Let me know if you’d like a comparison between **Section 44AD vs. 44ADA**, or a **ready-to-use note** for clients on presumptive taxation.
---
## 🔷 What is Section 44AD (Presumptive Taxation Scheme)?
**Section 44AD** allows **eligible businesses** to declare income at **8% (or 6%)** of total turnover or gross receipts, and **avoid maintaining books of accounts and getting tax audit** done — subject to certain conditions.
---
## ✅ Basic Conditions to Opt for Section 44AD:
| Condition | Description |
| ------------------ | -------------------------------------------------------------------------------- |
| Eligible Assessee | **Resident individual**, **HUF**, or **partnership firm** (excluding LLP) |
| Nature of Business | Any **eligible business** (not profession, not commission/brokerage, not agency) |
| Turnover Limit | **Up to ₹2 crore** in a financial year |
| Presumptive Rate | 8% of turnover (6% if receipts are via digital mode) |
---
## 🔴 Not Eligible Under Section 44AD:
1. **Professionals** covered under **Section 44AA(1)** — e.g., CA, doctors, lawyers, etc.
2. **Agency business**
3. **Commission or brokerage income**
4. **Non-resident taxpayers**
5. **LLPs**
---
## ❌ Can **real estate commission agents** opt for Section 44AD?
👉 **NO**, real estate commission agents **cannot** opt for Section 44AD.
> ❗ Because they earn income through **commission/brokerage**, which is **specifically excluded** from the scope of Section 44AD.
📜 **Reference**:
Section 44AD(6) says this section **shall not apply** to:
* a person carrying on **agency business**, or
* a person earning income in the nature of **commission or brokerage**
➡️ Real estate agents clearly fall into **commission/brokerage** category — so **Section 44AD is not available**.
---
## ✅ What can real estate agents do then?
They must:
* Maintain **books of account** as per **Section 44AA**
* File ITR under **normal provisions (ITR-3)**, and
* Go for **tax audit if turnover exceeds ₹10 lakh and net profit < ₹1.2 lakh** (as per new threshold rules), or other audit limits
---
## 📌 Summary:
| Topic | Answer |
| ---------------------------------------------------- | ------------------------------------------------------------------------- |
| Can a real estate commission agent opt for Sec 44AD? | ❌ **No** |
| Why not? | Income is **commission-based**, which is **excluded** under 44AD(6) |
| What should they do? | File ITR-3 under **normal provisions** and maintain **books of accounts** |
---
Let me know if you’d like a comparison between **Section 44AD vs. 44ADA**, or a **ready-to-use note** for clients on presumptive taxation.
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