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Sec 44ad & 44aa

04 March 2017

Dear All,

As we all know, that maintenance of Books of Accounts u/s 44AA is not required, if a person opts for presumptive taxation u/s 44AD, and a person opting for such scheme may even declare income greater than the income deemed u/s 44AD (i.e., income greater than deemed 8% of turnover). So in case a person opting for 44AD declares income greater than 8%, is it necessary for him to mantain books of accounts. The law is silent in this regard.

However, it is specifically mentioned in sec 44AA that, if a person declares income lower than income deemed u/s 44AD, and his income is greater than the minimum taxable limit, than he has to maintain books u/s 44AA.

What if the person declares income greater than 8%, which is beyond the minimum taxable limit?

Please clarify.

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2 Replies

Tony John (Chartered Accountant) (6085 Points)
Replied 04 March 2017

Where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AD and he has claimed such income to be lower than the profits and gains so deemed, and his income exceeds the maximum amount which is not chargeable to income-tax during such previous year, he shall maintain bokos of accounts u/s 44AA.

Hence if profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AD and he has claimed such income to be equal to or higher than the profits and gains so deemed, he need not mandatorily maintain books u/s 44AA.