The Background
My client started a new proprietorship business in May 2015.
Total Turnover : Rs. 90 Lacs (All funds revieced by cheque)
Total Income from Business : Rs. 40 Lacs (Currently In Bank)
He is planning to use the presumptive taxation scheme of section 44AD for filing his IT Return.
His actual income is Rs. 40 lacs. Under presumptive taxation scheme of section 44A income as 8% of turnover, His income to 7.2 Lacs, on which he pays tax.
Query
1) Under presumptive taxation scheme of section 44A, if a business has income more than 8%, are they legally bound to declare it?
2) If he goes ahead the above, what is the status of the Rs. 40.0 - 7.2 = 32.8 Lacs? In the eyes of the IT Dept, is that black (undeclared) income or is it white (declared) money?
Thanks for you time in advance.
CAclubindia
