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Whether application of 44AD is mandatory or Optional?

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anil agrawala

1 Points Posted on 03 August 2022

Going by the language used in section 44AD(1), it appears that it is a mandatory provision. Assessee does not have any option to choose between 44AD and normal provision.

Further, it also appears that even in case of an eligible assessee having eligible business and having turnover between 1 to 2 crores, he has to mandatorily declare profit of 8% or 6 %.

Replies (5)

Quick Summary

This discussion clarifies whether Section 44AD of the Income Tax Act is mandatory or optional for eligible businesses. It appears to be a mandatory provision for individuals, HUFs, and firms with turnover between £1 to £2 crore, requiring a declared profit of at least 8% or 6% of turnover. While higher profits can be declared to avoid tax audits, opting out of 44AD necessitates a formal audit. The section is particularly relevant for non-audit cases, with online transactions up to £10 crore potentially exempt from audit if 8% profit is declared.

Eswar Reddy S

CFO- at NHTF

58280 Points Posted on 03 August 2022

Need not be 8% or 6% , you may declare higher profits to avoid tax audit

veerendar singh

tax consultant

3306 Points Posted on 03 August 2022

Its a mandatory provision
for individual huf and firms its assumed that their business income is 8% of the turnover or higher amount as may be declared

if its claimed otherwise then he has to substantiate it with verifying his accounts by an auditor