Is there any change in 44AA?

 Dear Mr. sagar, please go through the following:

Special provision for computing profits and gains of business on presumptive basis

The existing provisions of the Income-tax Act, provide for taxation of income on presumptive basis in the case of construction

business, income from goods carriages and business of retail trade.

Section 44AD prescribes a method of presumptive taxation for assessees engaged in the business of civil construction

or supply of labour for civil construction in which a sum equal to eight percent of the gross receipts is deemed to be the profits

and gains from business. Section 44AE provides presumptive provisions for the assessees engaged in the business of plying,

hiring or leasing upto ten goods carriages in which a prescribed sum per vehicle is deemed to be the presumptive income of

the assessee. Section 44AF prescribes a method of presumptive taxation for retail trade, under which the presumptive income

is computed at the rate of a sum equal to five per cent of the total turnover.

There has been a substantial increase in small businesses with the growth of transport and communication and general

growth of the economy. A large number of businesses and service providers in rural and urban areas who earn substantial income

are outside the tax-net. Introduction of presumptive tax provisions in respect of small businesses would help a number of small

businesses to comply with the taxation provisions without consuming their time and resources. A presumptive income scheme

for small taxpayers lowers the compliance cost for such taxpayers and also reduces the administrative burden on the tax

machinery.

In view of the above, it is proposed to expand the scope of presumptive taxation to all businesses by substituting a new section

44AD. The salient features of the proposed presumptive taxation scheme are as under:

(a) The scheme shall be applicable to individuals, HUFs and partnership firms excluding Limited liability partnership

firms. It shall also not be applicable to an assessee who is availing deductions under sections 10A, 10AA, 10B, 10BA

or deduction under any provisions of Chapter VIA under the heading “C.—Deductions in respect of certain incomes” in

the relevant assessment year.

(b) The scheme is applicable for any business (excluding a business already covered under Sec. 44AE) which has a

maximum gross turnover /gross receipts of 40 lakhs.

(c) The presumptive rate of income is prescribed at 8% of gross turnover /gross receipts.

(d) An assessee opting for the above scheme shall be exempted from payment of advance tax related to such business

under the current provisions of the Income-tax Act.

(e) An assessee opting for the above scheme shall be exempted from maintenance of books of accounts related to such

business as required under section 44AA of the Income-tax Act.

(g) An assessee with turnover below Rs 40 lakhs, who shows an income below the presumptive rate prescribed under

these provisions, will, in case his total income exceeds the taxable limit, be required to maintain books of accounts

and also get them audited.

(h) The existing section 44AF is proposed to be made inoperative for the assessment year beginning on or after 1st day

of April, 2011.

The proposed amendment will take effect from 1st April, 2011 and will, accordingly, apply in relation to the assessment year

2011-12 and subsequent years. [Clauses 18,19,20,21,22]