Taxation under Section 44AD

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This discussion clarifies how to apply the presumptive taxation scheme under Section 44AD when dealing with mixed payment methods or advance receipts. It addresses specific scenarios like payments received partly by cheque and partly via TDS, and how to treat advance payments received through banking channels years before the bill is raised. The advice also touches upon the treatment of bad debts and unrealised sales within the 6% or 8% profit calculation.

Elbin

Elbin (Querist)

12 March 2024 If my business is eligible to avail sec 44AD. According to the section, as per turn over I've to show the profit 8% (cash receipts) / 6% (Digital receipts, Banking Mode). But pls. clarify sale payment rec'd part via. Cheque & balance in TDS

Should I show TDS amount in 6% or 8% ?. Kindly explain

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

13 March 2024 Show TDS amount in 6%.

Elbin

Elbin (Querist)

13 March 2024 @ Seetharaman Thank u Sir for the reply, also clarify the below:

1) Advance payment rec'd via bank channel 5 years before & Bill made in current year. Tax Slab will be 6% or 8% ?

2) Bad Debts, Outstanding payment will come under 8% right ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

13 March 2024 1 6%.
2 8%.

.....

Nikhil Kaushik

Nikhil Kaushik (Expert)

13 March 2024 just a correction here. If you are doing accrual basis. the bad debts should either be reduced from turnover. if you are covered under GST, file a proper credit note to reduce your turnover. For unrealised sales, there is no reason to include it under 8% because it has not been received at all at this stage.

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