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Presumptive taxation under Section 44ADA of the Income Tax Act

06 April 2022

Hello friends,

My income for the past year has been 11 lacs. I want to file income tax return as a professional. I am aware that you can claim 50% of your income as expenses. However, my actual expenses has been only 20% of my income. Around 8 lacs are still lying in my bank account.

Given that I have not spent 30% of my income as expenses, can I still claim 50% of my income as expenses? If yes, then how? Do I need to take out some money from my bank account?

Thanks.

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13 Replies

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 07 April 2022

Income Tax Dept has given this benefit of 50% if you are not maintaining books of accounts ..

So you can still avail 44ADA . They don't question this since it is 44ADA

1 Like

Subhankar Mishra (28 Points)
Replied 07 April 2022

If your Turnover is less than 50 lakhs Income Tax Department gives you this benefit under 44ADA you can claim 50% of the expenses even if you have not incurred them.

However if you want to show more than 50% of the Expenses you have to maintain proper books of accounts

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 07 April 2022

How much is your turnover ?

Chirag (Professional) (1979 Points)
Replied 07 April 2022

If you opt for 44ada it's presumed ,so you can go for 50% as your income ...Ie. 5.5 lacs without getting any exemption or deduction ...

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 07 April 2022

@ Mahendra

How much is your turnover ?

Mahendra Singha (9 Points)
Replied 07 April 2022

Hi,

My income/turnover has been INR 11 Lacs. My expenses have been around INR 2.5 lacs.

Subhankar Mishra (28 Points)
Replied 07 April 2022

You can claim 50% of your expenses on opting for presumptive taxation scheme.
If your Turnover crosses 50 lakh you shall not be eligible for this benefit

Mahendra Singha (9 Points)
Replied 07 April 2022

Hi Subhankar,

Thanks for replying. I agree with your point. Around 80% of my money is still in my bank account. If I claim 50% of my income as expenses, will there a problem given that my bank account suggests otherwise?

Mahendra Singha (9 Points)
Replied 07 April 2022

Hi Eswar SIr,

Can I claim only 25% of my income as expenses and not 50%?

Thanks.

Mahendra Singha (9 Points)
Replied 07 April 2022

Hi Eswar SIr,

Can I claim only 25% of my income as expenses and not 50%?

Thanks.

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 07 April 2022

@ Mahendra ,

It's upto you ..You can declare upto 50% expenses u/s 44ADA ..

You can also declare 75% profit .

E filing utility has two options , one is turnover and another one is profit ..It's upto you

Mahendra Singha (9 Points)
Replied 07 April 2022

Hi Eswar Sir,

Can you comment on this: "Around 80% of my money is still in my bank account. If I claim 50% of my income as expenses, will there a problem given that my bank account suggests otherwise?".

Thanks.