presumptive taxation

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rama krishnan

12244 Points Joined May 2017

for example, if a professional, has gross receipts of RS. 4500000/-. after deducting allowable expenses, the net profit arrives at rs. 3000000/-. now under 44ada, what is the amount to be shown as his total income?

Replies (19)

Krishna

Manager - Genesis Tax Consultant

531 Points Joined March 2018

50% of gross receipts allowed for professional if his income is less than 50 Lakhs. Hence Show is net profit as 22, 50,000/-

rama krishnan

12244 Points Joined May 2017

then what's the treatment about the balance amount i.e 7,50,000/-

Krishna

Manager - Genesis Tax Consultant

531 Points Joined March 2018

Sir If books not maintained you can consider based on my above reply, if you maintain books then you should by ITR3

rama krishnan

12244 Points Joined May 2017

how a business man could not maintain books? then how could he maintain details of creditors debtors cash sales cash expenses etc

Krishna

Manager - Genesis Tax Consultant

531 Points Joined March 2018

Each every business man maintain the Accounts in single entry system, business men well know about their profits.

rama krishnan

12244 Points Joined May 2017

I'm also asking about that only. when a business man determines his net profit as 30 LAKHS out of 45 lakhs gross receipts. then under 44ad, is he required to disclose 22.5 lakhs or 30 lakhs

Krishna

Manager - Genesis Tax Consultant

531 Points Joined March 2018

As per me I will go with 22.5 Lakhs, basis on gross receipts.

rama krishnan

12244 Points Joined May 2017

then how will you account for the balance 7.5 lakhs

Krishna

Manager - Genesis Tax Consultant

531 Points Joined March 2018

As per Income Tax, if a person has not maintain the books of accounts basis on the total gross receipt consider 50% as net income for professional, on that basis I will do my computation.

If a person maintain books of Accounts properly then there is no need of presumptive taxation. He can file the return in ITR3 and pay the actual tax as per the Actual information.

rama krishnan

12244 Points Joined May 2017

then how will you build up capital if you don't maintain books? just based on 50% presumptive income?

Krishna

Manager - Genesis Tax Consultant

531 Points Joined March 2018

Sir, It is purely depend upon the individuals who come for tax filing. Who ever comes, we ask them to maintain the books of accounts properly. If you are getting a new client and doesn't maintain the books of account at all. For him this we have to got also we need to educate him to maintain the books properly.

Presumptive Income is not the best solution for long term business....

rama krishnan

12244 Points Joined May 2017

just for the sake of academic interests only I'm asking... in my opinion, if you declare 22.5 lakhs under 44ad, then 7.5 lakhs will form part of concealed income

Krishna

Manager - Genesis Tax Consultant

531 Points Joined March 2018

I totally agree and not denying with your point, but a new client who comes and ask for filing the returns but he doesn't maintain any accounts and he doesn't have any bills. How we can proceed for him? Law is permitting to take total gross receipt of the business, if that is the case Income tax law should be change and it has to be very stringent on business people who does not maintaining books of accounts. Then everything will change, many people will get opportunity.