Taxability of Income from commission from sale of property.

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This discussion clarifies the taxability of income earned from property sales commissions. It explains that regular commission income is typically taxed under Section 28(i) as business income, while occasional commissions fall under Section 56(1) as income from other sources. Importantly, presumptive taxation schemes like Sections 44AD and 44ADA are not applicable to this type of commission income, though legitimate business expenses can be claimed.

Deepak Rawat

Deepak Rawat (Querist)

18 June 2020 Dear Sir/Mam,
Please make me clear that under which section Income from commission from sale of property will be taxable ?
Further, If I want to file return under presumptive taxation, then will it be taxable under 44AD or 44ADA ?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

18 June 2020 1) Section 28(i). If doing it regularly and income to be offered under the head 'income from business'.

If done occasionally. section is 56(1) and income is to be offered under 'income from other sources'

2) Section 44AD and 44ADA is not applicable in either of the above cases.

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Deepak Rawat

Deepak Rawat (Querist)

18 June 2020 Thank you sir. I refer above mentioned sections. Further, please let me know that will Income from Commission from LIC Insurance taxable under Section 44ADA ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

19 June 2020 No, it will be also taxable under business income.

Deepak Rawat

Deepak Rawat (Querist)

19 June 2020 Sir, If I file proper Balance Sheet and P&L, then I can show commission business under Section 44ADA ?
I have read that there is standard deduction of 50% for professional business under 44ADA.
Please make it clear and make me correct.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

19 June 2020 No, commission income not eligible for 44ADA option.
You can claim office expenses and traveling expenses from the income.

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