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Section 44ad & 44ae

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29 September 2015 Dear Friends,

Can a Pvt. Ltd. company opt for section 44AD & 44AE, also is presumtive taxation compulsory for firms and individuals whose income from business and profession does not exceed 25 lacs and 1 crore. In my opinion it is not compulsory it totally depends on the assessee. Please clear my doubt

29 September 2015 1. 44AD can't be for pvt ltd.

2. 44AD optional for individuals/huf/partnership.

29 September 2015 Sir, so you mean to say Section 44AE is applicable to Pvt. Ltd. companies. I had one more question in my mind that if an individual or a firm opting for section 44AD shows profit and gains less than 8% of the turnover and the taxable income does not exceed the exemption limits, the company would not be liable for Tax Audit U/s 44AB, in this way the company might skip from the ambit of income tax. In short applicability of section 44AB in 44AD should satisfy both the conditions or just one. it is quiet possible that the firm or individual might have had shown profit less that 8% as specified so that its taxable income is either equal to exemption limit or less than the same. Please clear if i am making mistakes

29 September 2015 1.Pvt ltd can opt 44AE.
2, Can't escape as you said because pvt ltd has no basic exemption. See section 44AE (7) and distinguish with 44AD(5).

29 September 2015 Please, I am sure you are using the words individual, firm and company interchangeably, especially when it has been made amply clear that Company can opt for 44 AE but not 44 AD.

Now, coming back to 44 AD, in the case of individual and/or Firm, as per 44 AD (5): no tax audit is applicable if the total income of the said individual and/or firm does not exceed the maximum amount chargeable to tax.

And so far as "ESCAPING" is concerned According to me, turnover being less than specified limit, they are small assessees is for sure.

AND although they might escape from tax audit, they can not escape from other sections of income tax viz 133, 148 and so on.

29 September 2015 Sir, if a pvt. ltd. company opts for Section 44AE will it be liable to deduct TDS on payments related to Section 194C,94I,94J etc. Thanking you all in advance for your guidance and support.

29 September 2015 yes,
44AE has nothing to do with TDS provisions.

TDS must be done as and when applicable.

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