What are the things other than eligibility that someone should not adopted Presumptive Income Tax

I have read a lot of benefits when an eligible person adopts the 'Presumptive Income tax scheme' but everything has two sides so If I am assuming that I am eligible but what are the things why I should not adopt the 'Presumptive Income tax scheme' or why people don't adopt even if they are eligible to adopt.

example : a person has to only pay 6% of turnover on goods and if services then 50% of total gross profit will be considered taxable income.

But if someone has not adopted and has taken deduction 10A/10AA/10B/10BA or under section 80HH to 80RRB then that would reduce the tax even below 6% but then what about Alternate Minimum Tax rule (if not earn from SEZ unit) which will override the benefit of adopting either 'Presumptive scheme' or 'not adopting presumptive but availing deductions'

Great question! While the Presumptive Income Tax Scheme under Sections 44AD (for businesses) and 44ADA (for professionals) offers simplicity and ease, there are several reasons why some eligible taxpayers might choose NOT to adopt it despite its benefits. Here’s a detailed list of factors to consider:

Why Someone Should NOT Adopt the Presumptive Income Tax Scheme (Even If Eligible):

Losses Cannot Be Carried Forward or Set Off
- Under presumptive taxation, you cannot declare losses.
- If actual business expenses exceed income, you cannot carry forward or set off losses against other income.
- So, if your business is incurring losses or expects high expenses in some years, presumptive taxation is disadvantageous.
Limited Deductions Available
- You cannot claim detailed business expenses as deductions other than those built into the presumptive rate.
- If your actual expenses are higher than the presumptive profit percentage (6% or 8% or 50%), you lose out on tax saving.
No Deduction for Special Incentives (Section 10A/10AA/10B etc.)
- You cannot claim exemptions or deductions under specific sections (e.g., 10A, 10AA for SEZ units, 80HH to 80RRB for industry incentives).
- If you have significant deductions available under these provisions, opting for presumptive taxation may increase your tax liability.
Compliance Requirements for Next 5 Years
- Once you opt out of presumptive taxation, you cannot opt back for the next 5 years if your turnover exceeds the prescribed limit.
- This restricts flexibility in tax planning for future years.
Tax Audit
- Businesses with turnover exceeding the presumptive limit need to get their accounts audited.
- Some might prefer detailed accounts and audit to show genuine lower profits and avail exemptions.
Alternate Minimum Tax (AMT) Impact
- For certain taxpayers, especially those claiming deductions under Section 10A/10AA, the AMT provisions may negate the tax benefits.
- Under presumptive taxation, AMT may or may not apply; understanding your AMT liability is important before opting for presumptive scheme.
Ineligibility of Certain Types of Income
- Income from capital gains, commission, brokerage, and some other sources cannot be declared under presumptive income scheme.
- If you have diverse sources of income, presumptive scheme may not be fully applicable.

Summary:

Factor	Presumptive Scheme	Regular Scheme
Loss adjustment	Not allowed	Allowed
Claiming actual expenses	No	Yes
Deductions under Sections 10A, 10AA, 80HH etc.	No	Yes
Tax audit threshold	Higher	Lower (more audit)
AMT applicability	Depends	Depends
Flexibility in tax planning	Restricted	Flexible

When to Avoid Presumptive Taxation?

If you have high expenses or losses.
If you want to claim industry-specific deductions or exemptions.
If you prefer detailed accounting and want to maintain complete control over your income and expenses.
If you anticipate turnover crossing the limits, leading to mandatory audit.
If you want flexibility in tax planning for coming years.