Urgent question regarding section 44ad for my case
This query is : Resolved
11 September 2012
This question is for Financial year 2011-12 for which i have to file returns before 30 Sep 2012. Replies would be highly appreciated.
I am propreitor doing software service business. This year I have revenue of 55lakh. But in each of previous 2-3 years I have revenue of more than 80 lakhs and accounts were audited.
But in mid of this year I splited by business and started Pvt Ltd. Hence my revenue dropped to 55lakh for 7 months. But i gained salary from Pvt Ltd (around 12 lakhs) for remaining 5 months.
Moreover I done futures/options/commodity trading. (volume is huge, but profit under 10 thousand)
Also I have bank interest of more than 7 lakhs.
My question is am I eligible for 44AD?
Will be highly appreciated if someone can confirm early.
Thanks and regards,
ajay.
I am propreitor doing software service business. This year I have revenue of 55lakh. But in each of previous 2-3 years I have revenue of more than 80 lakhs and accounts were audited.
But in mid of this year I splited by business and started Pvt Ltd. Hence my revenue dropped to 55lakh for 7 months. But i gained salary from Pvt Ltd (around 12 lakhs) for remaining 5 months.
Moreover I done futures/options/commodity trading. (volume is huge, but profit under 10 thousand)
Also I have bank interest of more than 7 lakhs.
My question is am I eligible for 44AD?
Will be highly appreciated if someone can confirm early.
Thanks and regards,
ajay.
12 September 2012
Yes
Anuj
femaquery@gmail.com
Anuj
femaquery@gmail.com
12 September 2012
Anju,
Thanks. But could you re-confirm.
Will the salary from my private limited will not affect my propreitorship revenue?
Also for 7 months i did business as propreitorship. then next 5 months i worked as director in pvt ltd. I hope i can still file my return as bussiness and not salaried individual? because i think 44ad is not valid for professional or salaried people.
Also earlier i didnt know i will start pvt limited. so i have more than 5 lakh income tax refund. I can claim that rite?
regards,
ajay
Thanks. But could you re-confirm.
Will the salary from my private limited will not affect my propreitorship revenue?
Also for 7 months i did business as propreitorship. then next 5 months i worked as director in pvt ltd. I hope i can still file my return as bussiness and not salaried individual? because i think 44ad is not valid for professional or salaried people.
Also earlier i didnt know i will start pvt limited. so i have more than 5 lakh income tax refund. I can claim that rite?
regards,
ajay
13 September 2012
If someone can clarify?
sorry again putting this query to open
sorry again putting this query to open
02 August 2025
Here’s a detailed response for your **Section 44AD eligibility** and related issues for FY 2011-12 based on your situation:
---
### Your facts recap:
* Proprietorship business (software services) revenue for part of year: ₹55 lakh
* Previous years: turnover > ₹80 lakh (audited accounts)
* Mid-year, you started a Pvt Ltd company, so revenue dropped in proprietorship to ₹55 lakh for 7 months
* Salary from Pvt Ltd (as director): ₹12 lakh for remaining 5 months
* Futures/options/commodity trading with large volume but negligible profit ( ₹7 lakh
---
### 1. **Eligibility for Section 44AD (Presumptive Taxation for Business):**
Section 44AD applies to eligible businesses with turnover up to ₹1 crore (limit was ₹1 crore for FY 2011-12). Key points:
* **Turnover limit:** Your proprietorship turnover ₹55 lakh ₹7 lakh is taxable under **Income from Other Sources**.
* This is **not part of 44AD** presumptive income.
---
### 5. **Filing return**
* You can file your return with:
* Proprietorship income under business income (claim 44AD presumptive income on ₹55 lakh)
* Salary income from Pvt Ltd separately under salary head
* Interest income under other sources
* Trading income/loss separately (not under 44AD)
---
### 6. **Claiming refund of earlier years**
* You mentioned refund of more than ₹5 lakh due from earlier years. You can claim it in the relevant return where applicable.
* Ensure you file return within due dates to avoid losing the refund.
---
### Summary:
| Income Type | Tax Treatment | 44AD Applicability |
| --------------------------------- | --------------------------------------------------------- | ------------------ |
| Proprietorship software business | Business income, eligible for 44AD if turnover ≤ ₹1 crore | Yes |
| Salary from Pvt Ltd | Salary income | No |
| Futures/Options/Commodity trading | Speculative/business income | No |
| Bank interest | Income from other sources | No |
---
### Final advice:
* You are **eligible to opt for 44AD for your proprietorship business turnover of ₹55 lakh**.
* File your ITR accordingly, declaring all heads separately.
* You cannot club salary income or interest income with 44AD income.
* Maintain proper records, as you may be asked for proofs if questioned.
* For futures/options trading, declare actual income/loss as per accounts.
---
If you want, I can help draft how to fill the ITR or prepare your presumptive income computation. Let me know!
---
### Your facts recap:
* Proprietorship business (software services) revenue for part of year: ₹55 lakh
* Previous years: turnover > ₹80 lakh (audited accounts)
* Mid-year, you started a Pvt Ltd company, so revenue dropped in proprietorship to ₹55 lakh for 7 months
* Salary from Pvt Ltd (as director): ₹12 lakh for remaining 5 months
* Futures/options/commodity trading with large volume but negligible profit ( ₹7 lakh
---
### 1. **Eligibility for Section 44AD (Presumptive Taxation for Business):**
Section 44AD applies to eligible businesses with turnover up to ₹1 crore (limit was ₹1 crore for FY 2011-12). Key points:
* **Turnover limit:** Your proprietorship turnover ₹55 lakh ₹7 lakh is taxable under **Income from Other Sources**.
* This is **not part of 44AD** presumptive income.
---
### 5. **Filing return**
* You can file your return with:
* Proprietorship income under business income (claim 44AD presumptive income on ₹55 lakh)
* Salary income from Pvt Ltd separately under salary head
* Interest income under other sources
* Trading income/loss separately (not under 44AD)
---
### 6. **Claiming refund of earlier years**
* You mentioned refund of more than ₹5 lakh due from earlier years. You can claim it in the relevant return where applicable.
* Ensure you file return within due dates to avoid losing the refund.
---
### Summary:
| Income Type | Tax Treatment | 44AD Applicability |
| --------------------------------- | --------------------------------------------------------- | ------------------ |
| Proprietorship software business | Business income, eligible for 44AD if turnover ≤ ₹1 crore | Yes |
| Salary from Pvt Ltd | Salary income | No |
| Futures/Options/Commodity trading | Speculative/business income | No |
| Bank interest | Income from other sources | No |
---
### Final advice:
* You are **eligible to opt for 44AD for your proprietorship business turnover of ₹55 lakh**.
* File your ITR accordingly, declaring all heads separately.
* You cannot club salary income or interest income with 44AD income.
* Maintain proper records, as you may be asked for proofs if questioned.
* For futures/options trading, declare actual income/loss as per accounts.
---
If you want, I can help draft how to fill the ITR or prepare your presumptive income computation. Let me know!
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