Clarification regarding applicability of section 44AD

Dear Suraj,

As per Sec 44AD of Income tax Act ,

1) if the turnover does not exceed RS 2 crore it will be easily acceptable but one most dangerous  Provision is that if you are not continue Sec 44AD then till 5 years from now you cannot be apply 44AD for income .

2)  if you show income less than 8% if received in Cash and less than  6% if you received income through Bank , DD and Electronic Mode in that case audit is Mandatory and not voluntary.

So in last considering the above Provision please take a decision whether to follow 44AD or go to normal way.

But in Normal way you required to mained books of Accounts as per 44A of Income tax Act 1881.

Mr. suraj.. company is not an eligible assessee to opt for 44ad.. please go through the following provisions

44AD. [1] Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession" :

[a] "eligible assessee" means,—
[i] an individual, Hindu undivided family or a partnership firm, who is a resident, but not a limited liability partnership firm as defined under clause [n] of sub-section [1] of section 2 of the Limited Liability Partnership Act, 2008 [6 of 2009]; and

First of all sec 44AD does not apply to a company,
and the simple answer of your query is that
if your t/o is upto 2cr then you can opt 44AD and you have to declare income @ 8%/6% even if you maintain books of account

If you want to declare less than 8% of turnover as profit then you should get the books audited. As audit is compulsory for a company as per companies act you no need to get again audit for books.

Thanks to all for replying,

So, the Crux is that in case of Individual etc( i.e. eligible assessee) if my T/o is <2cr then I have to go for audit if I wish to declared profit < 8%/6% even though I have not opted for 44AD and I maintained full books of accounts.

Can you please confirm that?

1. It is important to read sec 44AB and sec 44AD separately and then try to see the connection between these two sections. 
2. Sec 44AB is a mandatory provision which requires all the assessee (non-corporates) to comply with the provision if their gross receipts or T.O exceeds Rs. 1 crore during the year. Whereas sec 44AD is an option available to the assessee to show their profit on a presumptive basis provided their gross receipts or T.O does not exceed Rs. 2 crores. So, eligible assessee's T.O should be less than Rs. 2 crores to avail this option.
3. On the conjoint reading of these two sections we arrive at a question so if my T.O or gross receipts exceeds Rs. 1 crore and if I avail the option to show my profit u/s 44AD, should I have to carry out tax audit u/s 44AB..? 
4. Though provision has not expressly stated that those who opt for presumptive taxation scheme need not required to carry out tax audit but as per sec 44AD(5), it is read as "those who have covered u/s 44AD(4) will be required to maintain books of accounts and carry out audit". Sec 44AD(4) deals with failure to show profit u/s 44AD(1) for a period of 5 years after the year from which the scheme was opted. 
5. From the above interpretation, we can say if you have opted for sec 44AD you are not required to maintain books of accounts u/s 44AA and not required to carry out audit u/s 44AB. Since the point in bringing sec, 44AD is to relieve the small taxpayers from the burden of maintaining the books of accounts and other compliance aspects. 
6. In your case, T.O is only Rs. 85 lakhs and if you decide to show profit u/s 44AD, there is no need for maintaining books of accounts and carry out an audit. Even if you decide not to show your profit u/s 44AD still you need to carry out audit because T.O had not crossed Rs. 1 crore. However, you need to show profit u/s 44AD for five consecutive AY after the current AY as per sec 44AD(4). 
7. In conclusion, to answer to your question sec 44AD is optional and if you have opted for it you don't need to maintain books of accounts u/s 44AA and carry out audit u/s 44AB. 
8. You have mentioned it as Co(company)  XYZ. Companies are not eligible assessees as per sec 44AD. 
Please correct me if the above interpretation has an alternative view. 

If your turnover is more than 100 lakh and less than 200 lakh then only you have to get your books audited in case you don't comply with sec 44AD.

If your turnover is less than 100 lakh then you may declare any percentage of profit without audit.

But if you have opted for 44AD in previous year and want to opt out this year, you will not be allowed to opt for it for next 5 years.

Hi, If I pay tax on business as per presumptive taxation scheme, do I need to again pay personal income taxes after taking the profits? Read more at: https://www.caclubindia.com/forum/details.asp?mod_id=520700#reply

Hi , If I pay tax on business as per presumptive taxation scheme, do I need to again pay personal income taxes after taking the profits? Read more at: https://www.caclubindia.com/forum/details.asp?mod_id=520700#reply

thanks @ Mehul Porwal, I agree with you..👍

Can I avail presumptive taxation scheme after 5 years availed this same scheme. How many years I can avail this scheme.