Benefits of u/s. 44AD

CA Navin Jain (MANAGER (FINANCE & ACCOUNTS))   (11768 Points)

20 July 2011  

What are the benefits of getting the assessment u/s. 44AD?

One may note the benefits of being covered by section 44AD: -

1. Assessee will be exempted from the requirement of maintaining any books of account as prescribed u/s. 44AA.

2. Assessee will not be required to get the accounts audited u/s. 44AB. Further, the turnover of such business will not be considered for calculating the turnover u/s. 44AB.

3. In the new provisions, the assessee is made further exempt from the requirement of payment of advance-tax. Thus, assessee will not be liable for interest u/s. 234B and 234C.

4. No separate deduction will be allowable u/s. 30 to 38 and no disallowance will be made u/s. 40 to 43D. This means that even if assessee does not deduct TDS, or makes cash payment exceeding prescribed limit u/s. 40A(3), or does not discharge statutory dues u/s. 43B, or makes illegal expenses under Expln. to section 37; no disallowance will be made for same.

5. One may further note, although assessee will not be getting any deduction/ no separate disallowance will be made; yet, in case of firm, a separate deduction u/s. 40(b) for payment to partners will be allowed.

6. Another benefit of offering income u/s. 44AD is that generally scrutiny norms do not cover section 44AD cases. In case assessee offers income lower than section 44AD, scrutiny assessment is mandatorily done.

7. It may also be noted that the depreciation will be deemed to have been allowed. Therefore,the Written Down Value of the assets will be deemed to have been recomputed and reduced.