Wholesales businesss is included u/s 44 ad of it act or not

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Querist : Anonymous

Querist : Anonymous (Querist)

29 October 2011 Dear Sir,
Whether Wholesales business is included under section 44 AD of the Income Tax Act, 1961
i.e compulsory to show 8% as Net Profit
and if 8% is taken as net profit whether deduction u/s. 80C, 80D and 80CCF will be available on 8%.
In my opinion the 8% provision will be applicable in wholesales business and CHAPTER VI A deduction will be avialable.
pl clarify
D K BOHRA

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

29 October 2011 Yes your understanding is correct, if annual turnover is less than Rs. 60 lakhs and the assessment year concerned is 2011-12.

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Querist : Anonymous

Querist : Anonymous (Querist)

31 October 2011 Dear Sir,
Apart from the wholesales of Rs. 40.00 Lacs, An amount of Rs 2.00 Lacs has been received as commission on institutional sales under the same business name.
Now we can take 8% of 42.00 Lacs
Is it ok
In my opinion it seems to be ok as invoices on which commission is received has not been raised by my client
Pl advice

D K Bohra

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

03 August 2025 Hey! Here’s a clear explanation regarding your query on wholesale business under Section 44AD of the Income Tax Act:

1. Is Wholesale Business Covered under Section 44AD?
Yes. Wholesale business is included under Section 44AD.

Section 44AD applies to any eligible business (except those specified under Section 44AA(1)) with turnover/gross receipts up to Rs. 2 crore (earlier Rs. 60 lakhs for FY 2011-12).

So, wholesale trading qualifies and you can opt for presumptive taxation under Section 44AD.

2. Is it Compulsory to Show 8% as Net Profit?
Under Section 44AD (for AY 2011-12 and earlier), 8% of turnover is considered as deemed profit if turnover/gross receipts are up to Rs. 60 lakhs.

If payment is made through digital mode, the rate is 6% instead of 8%.

So yes, 8% (or 6%) of turnover is treated as net profit for taxation.

3. Are Deductions under Chapter VI-A (like 80C, 80D, 80CCF) Allowed?
Yes, deductions under Chapter VI-A are allowed on the taxable income computed under Section 44AD.

That means, after computing 8% of turnover as income, you can claim deductions under sections like 80C, 80D, 80CCF etc., subject to conditions.

4. Regarding Commission Income Along with Wholesale Business Turnover
If commission income is earned in the course of the same business and is part of your gross receipts, then yes, it should be included in the total turnover for calculating presumptive income under Section 44AD.

So, turnover = Wholesale sales + Commission (Rs. 40L + 2L = Rs. 42L).

This combined amount will be considered for applying 8% presumptive income.

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