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Need help/view of tax accountant for business ITR

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Kumar Thakkar

97 Points Posted on 08 September 2025

I have 40 lakh of sales and declaring net 12-13% profit (after employee expanse) as per presumptive scheme

But

My CA told that you should not claim employe expanse of 9,000 per month total 1,08,000 ₹ per year and may get scrutiny?

I told , I'm paying in cash and as per rule it's below 10,000 ₹ expanses and paying monthly in cash

So why this is not allowed , any specific cases where it was not allowed?

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Replies (4)

Quick Summary

A business owner is seeking clarification from a tax accountant regarding the deductibility of employee expenses under the presumptive taxation scheme (Section 44AD). Despite paying employees in cash below the £10,000 threshold, their CA advised against claiming this expense, fearing scrutiny. The owner questions this advice, as other expenses like transport and depreciation are claimed by similar businesses. They are seeking insights into specific cases where such expenses were disallowed and whether they can claim their £1,08,000 annual employee costs.

Rama chary Rachakonda

Master in Accounts & high court Advocate

9620 Points Posted on 08 September 2025

The presumptive taxation scheme under Section 44AD of the Income Tax Act allows for a deemed profit of 8% of turnover (or 6% if turnover is via digital means for businesses with turnover upto two crores). For businesses opting for thi scheme: expenses are not separately claimed or deducted.

The scheme simplifies tax computation based on turnover.

Kumar Thakkar

97 Points Posted on 08 September 2025

Thank you sir for replying

So it could be normal filing as we not needed audit and showing balance sheet and everything in ITR 3

He claims transport expanses , depreciation of vehicles and furniture, other charges in ITR as I checked so can we also claim my employee expanse of 1,08,000 yearly?