Section 44ad

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 February 2014 My assessee has gross receipt of Rs. 57,78,000,net loss of Rs. 46,47,232 and unabsorbed depreciation of Rs. 24,18,392. I want to declare the income u/s 44AD as loss of Rs 46,47,232. It is possible? If yes am i liable for audit u/s 44AB

AVTAR SINGH

AVTAR SINGH (Expert)
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03 February 2014 Loss can't be declared u/s 44AD.

Querist : Anonymous

Querist : Anonymous (Querist)

04 February 2014 U/s 44AD i interpreted that a taxpayer can declare his income to be lower than the deemed profit and gain. The following consequences are applicable if the taxpayer declare his income which is lower than the deemed profit & gain:
1. The taxpayer will have to maintain the books of account as per section 44AB( irrespective of income or turnover)
2. The taxpayer will have to get his books of account audited u/s 44AB ( irrespective of turnover) if his total income exceeds the exemption limit.
What here exemption limit means????

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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23 July 2025 Excellent question — you're raising two key issues under Section 44AD and Section 44AB(e):

Can a loss be declared under Section 44AD?

What is the meaning of "exemption limit" in this context?

Let’s answer both clearly and precisely.

🔷 1. Can a Loss Be Declared under Section 44AD?
👉 No. You cannot declare a loss under Section 44AD.

Section 44AD is a presumptive income scheme — it allows a business to declare profit at 8% (or 6%) of turnover, without maintaining books of accounts or getting audited.

But if you want to declare income lower than the presumptive rate, then you are not using Section 44AD at all. You are opting out of it.

So in your case:

Gross receipts: ₹57,78,000

Net loss: ₹(46,47,232)

You cannot show this loss under Section 44AD.
You must file under normal provisions (i.e., ITR-3) and maintain books of accounts.

🔷 2. Am I Liable for Audit u/s 44AB?
Yes — possibly.

👉 When a person opts out of 44AD, and:

Total income exceeds the basic exemption limit, and

Income declared is lower than 8% (or 6%) of turnover,

then Section 44AB(e) applies — i.e., tax audit becomes mandatory.

🔷 3. What Is “Exemption Limit” in This Context?
👉 It means the basic exemption limit for taxability, which is:

Category Basic Exemption Limit
Individual (Age exemption limit)

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