Doubts about 44ad vs 44ada vs 44ae

Hi,

Few doubts about 44ad vs 44ada vs 44ae

- Advertising business, some call it advertising agency, some websites say that agency work is not included in 44ad and to select 44ada instead but some say that it is not an agency in the real sense and to select 44ad under code 16019 or 21008. What is recommended here? Only 1 sales and purchase bill in the year for 8 lacs (34000 net profit), raised under SAC Code- 998365, Sale of Internet advertising space and then the gst number was surrendered. No work was done in prior years since 2020 and ITR-1 was being filed with NIL gst returns per month. As there are no books of accounts for the prior years so had to select the presumptive income option.

- If ITR-4 is selected under 44ad or ada, then can we take stcg from the sales of debt funds here?

Hey Arora! Great questions — these sections can be confusing. Let me clarify the differences and help you with your specific scenario.

Overview of Sections 44AD, 44ADA, and 44AE (Presumptive Taxation)

Section	Applicability	Business Type	Turnover Limit	Who should use it?
44AD	Small businesses (other than professionals)	Eligible businesses like trading, manufacturing, or services (except professionals)	Up to ₹2 crore turnover	Small businesses except professionals/agency
44ADA	Professionals	Professionals covered under section 44AA(1) like lawyers, doctors, architects, advertising agencies (mostly professionals)	Up to ₹50 lakhs gross receipts	Professionals including some advertising agencies
44AE	Transporters	Transporters owning not more than 10 goods vehicles	Based on number of vehicles	Transport business

Your Scenario: Advertising Business / Agency

Is advertising business covered under 44AD or 44ADA?
- This depends on whether it’s a professional service or a business.
- If it’s advertising agency services (agency work with clients), usually it’s considered a professional service and falls under 44ADA.
- If it’s purely sale of advertising space (like you selling internet advertising space) without agency functions, it may fall under 44AD as a business.
Your SAC code: 998365 (Sale of Internet advertising space)
This generally classifies as business income, not professional services.
GST & Income:
Since GST registration was surrendered and you had limited sales (₹8 lakhs) with no books maintained, presumptive taxation under 44AD seems appropriate.
Websites saying agency work is excluded from 44AD:
True, agency services (i.e., professional services where advice, consultancy is involved) come under 44ADA. But if you are just selling space, it’s more like business income (44AD).

About your Profit & Filing:

₹8 lakhs turnover and ₹34,000 net profit on presumptive basis sounds aligned with 44AD (8% of turnover is presumed profit, here ₹64,000, so ₹34,000 actual is less but you pay tax on presumptive amount).
If you choose 44ADA, presumptive profit is 50%, but your income is small, so 44AD may be more beneficial here.

Filing ITR:

If you select ITR-4 under 44AD or 44ADA, you can still declare STCG (Short Term Capital Gains) separately in the same return.
STCG (like from sale of debt mutual funds) is separate from presumptive business income and should be reported in the ITR-4 form in the appropriate schedule (Schedule CG).

Summary:

Question	Recommended Approach
Advertising agency or business?	Since you sell internet ad space (SAC 998365) without agency service, use 44AD.
Filing ITR	Use ITR-4 with presumptive income under 44AD.
STCG inclusion	Yes, include STCG separately in ITR-4.