Outsourcing services - 44ab profession vs business

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28 Points Posted on 15 July 2014

I am planning to setup a sole propritorship for handling an outsourcing assignment where I need to provide 3 resources for a US company. These resources will be doing online marketing activities.

I need to know if this company will be considered as a Business or a Profession for 44AB audit? Not sure if the above activities will fall under the purview of Information Technology.

Also, if it's considered as a business can I do the 8% tax under 44AD without book-keeping?

Replies (3)

Fenil Shah

Audit & Tax Executive

237 Points Posted on 15 July 2014

It depends on that you are a professional (Person having Specialised Qualification in the respective field) or a businessman.

If you are doing business then you can avail the benifit u/s 44AD & show your income @ 8% of your turnover.

Thanks for the answer. In this case the proprietor of the firm doesn't has a background in services being offered. Employees will be hired to perform the services. So, as far as I understand - this will be considered as business, right?

Also, if I use 44AD, will I need to maintain books of account?

Fenil Shah

Audit & Tax Executive

237 Points Posted on 15 July 2014

Yup, It'll be business & there is not need to maintain detailed books of accounts u/s 44AD; but basic books of accounts as will help to determine your turnover needs to be maintained.