Section 44AD

Thanks 

Dear Rajesh,

In regards to your query, please refer the following explanation:

In the case of Business losses

Here, we have taken scenarios where a person has incurred losses in his business and wants to compute whether tax audit is applicable in their case or not, please check the explanation in the table below:

According to your query, you fall under scenario 1 or 2, and hence, no Tax Audit is applicable in the given case.

In case of further queries, please do let us know.

Dear Raja Sir,

Assumption: considering the situation of small businesses.

Suppose, I am filing my Income Tax Return in previous three years with opting Presumptive scheme, and to avoid preparing and reporting complete details of Profit or loss and balance sheet in the current year while filing ITR-3 (as I have incurred business loss in the current year) and I prefer to file voluntarily in the presumptive scheme and report my income from profit and gain from Business or Profession at 8% / 6% (as section 44AD says) even though the losses. So, in this case, I can still opt for a presumptive scheme and remain in the lock-in period of 5 years.

From the above, I can say that we can file u/s 44AD even though losses.

Please correct me If I am wrong here.

Originally posted by : Payal Gupta
	Well done Dear,   Assumption: considering the situation of small businesses.   - First of sec 44AD usable for small businesses turn over upto 2Cr. But, It's not have any special exemption if lesser turn over. Want to file with profit of required limit.   Suppose, I am filing my Income Tax Return in previous three years with opting Presumptive scheme, and to avoid preparing and reporting complete details of Profit or loss and balance sheet in the current year while filing ITR-3 (as I have incurred business loss in the current year) and I prefer to file voluntarily in the presumptive scheme and report my income from profit and gain from Business or Profession at 8% / 6% (as section 44AD says) even though the losses. So, in this case, I can still opt for a presumptive scheme and remain in the lock-in period of 5 years. From the above, I can say that we can file u/s 44AD even though losses. -  No. In presumptive scheme Taxpayer will br shown Profit as per required limit     Please correct me If I am wrong here.

I can't understand this 

( Suppose, I am filing my Income Tax Return in previous three years with opting Presumptive scheme, and to avoid preparing and reporting complete details of Profit or loss and balance sheet in the current year while filing ITR-3 (as I have incurred business loss in the current year) and I prefer to file voluntarily in the presumptive scheme and report my income from profit and gain from Business or Profession at 8% / 6% (as section 44AD says) even though the losses. So, in this case, I can still opt for a presumptive scheme and remain in the lock-in period of 5 years. )

As per my assumption of above quotes :-

- Tax payer without complete 5 years as above and will opt out then Audit applicable...

- Taxpayer file his return with profit (as per sec) three years and now he will file with loss (under - presumptive) then also applicable audit. Can't be file with loss

Please give Your view and elaborate  above notes by You...

Dear Raja Sir,

Please consider my views against your replies; pointwise:

- First of sec 44AD usable for small businesses turn over up to 2Cr. But It's not have any special exemption if lesser turn over. Want to file with profit of required limit.

Yes, Section 44AD is applicable to a person having turnover up to 2Crore, there is no doubt in it.

In my assumption, “considering the situation of small businesses”. Here, I am concerning with persons having business turnover which gives them negligible amount of tax.

Take an example (Disclaimer: just an example to create a circumstance):

Turnover: INR 31,26,000

Expenditure: INR 40,35,980

Business loss: INR 9,09,980

In this case, if I prefer to file Income Tax Return u/s 44AD and file ITR-4 and show

Net Profit: 8% of 31,26,000 = 2,50,080.

I think, in this case, Tax Audit is not applicable as I show profit in business instead of losses.

Taxpayer without complete 5 years as above and will opt out then Audit applicable...

Yes, Audit is applicable, but income should exceed basic exemption limit.

Taxpayer file his return with profit (as per sec) three years and now he will file with loss (under - presumptive) then also applicable audit. Can't be file with loss

For this, if I don’t show any losses in Income Tax Return and report income as per the limit 8% / 6%. Please refer my example given in first para.

I hope you understand the case.