What if revenue from professional presumptive u/s 44ADA crosses the limit of 50 L during the scheme

ITR 364 views 3 replies

mack

Thinking-to-start-business

154 Points Joined November 2022

Presumptive Scheme Section 44ADA Eligibility Profession turnover < 50 Lakh then 50% on the total gross profit receipts will be not considered as taxable income.

1) How service professionals (service providers) will calculate turnover. For example, if a doctor's fee is 100 per patient multiplied by 10 patients per day multiplied by 365 then 3,65,000 is his total annual fee, and then add expenses of building rent and others of 1,00,000 so does this turnover will be considered 4,65,000 and profit will be 3,65,000?

2) Does the presumptive scheme for professionals (44ADA) work for a 5-year span? because

3) What if for the first financial year turnover was below 50 lakhs but next year it was more than 50 lakhs so the presumptive scheme will be violated as we can’t use a similar calculation to what we use with u/s44AD as in this u/s 44ADA it is 50% of actual profit is considered as taxable? so How this will work out?

Replies (3)

CA Raj Doshi

Practising CA

8944 Points Joined December 2013

4ADA works upto 50 lakh Turnover. Above that income tax audit is applicable.

1. Amount received from patients is sales turnover fo4 44ADA. expenses incurred not to add in sales turnover. sl 365000 turnover and profit 182500

2. No.

3. Maintain books of accounts and get it audited and offer actual profit say 25%, 60%, 75% as per actuals.

mack

Thinking-to-start-business

154 Points Joined November 2022

Just clearing the last (3rd point), you are telling that for that particular year when turnover is more than 50 Lakh (so Sec 44ADA not applicable) so the taxpayer has to maintain books of account and pay tax on a normal tax slab.

this means that when conducting professional business (comes u/s 44ADA) a taxpayer can opt for every year based on that year's turnover and not opt for those years when turnover is more than 50 Lakhs.