What is SEC 44AD of Income Tax Act?
Section 44AD is a presumptive taxation scheme that was introduced by Income Tax Law in order to ease the tax burden on small taxpayers or assessees. Individuals who come under the provisions of this scheme need not maintain or show books of account, nor are they required to get an audit performed on the same.
How do I calculate 44AD income?
In case of a person adopting the provisions of section 44ADA, income will be computed on a presumptive basis, i.e. @ 50% of the total gross receipts of the profession. In other words, total gross receipts from profession should not exceed Rs 50 lakh for a financial year.
What is the difference between 44AD 1 and 44AD 4?
As per section 44AD(1), an eligible assessee may declare deemed profits of 8% or higher. Section 44AD(4) states that the assessee must disclose its ”Profits” as per the rate given by Section 44AD(1) i.e. 8%/6% for the next 5 years following the previous year in which he opts for Section 44AD.
Is TDS applicable for 44AD?
A will be required to deduct TDS even if income is declared u/s 44AD otherwise he will be deemed as assessee in default as per sec 201. However, he does not deduct TDS, no disallowance of expense will be made as per sec 40(a).
What is 44AD block period?
So if you opt for presumptive scheme, continue for 5 years and if you want to opt out, you’ll be barred from resuming with the presumptive scheme for a period of 5 years. As per the changes in the Budget of 2016, businesses with turnover up to Rs 2 crores can opt for presumptive taxation scheme.
Is 44AD compulsory?
Ans – Section 44AD is facility i.e. option available to the assessee it is not mandatory for eligible assessee to opt for Section 44AD.
Who is liable for 44AA?
Section 44AA
- Legal.
- Architectural.
- Accountancy.
- Medical.
- Engineering.
- Technical consultancy.
- Interior decoration.
- Authorized representative: an individual who represents someone before any authority under the law for a fee. It does not have to be an employee; it can simply be someone who is giving the services of accountancy.
How do I file 44AD?
ITR-4 Form is the Income Tax Return form for the taxpayers who opt for a presumptive income scheme under Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act. However, if the turnover of the business mentioned above exceeds Rs 2 crores, the taxpayer will have to file ITR-3.
Can we show more than 8% profit in 44AD?
However, Section 44AD(1) further gives an option to the assessee to claim more than 8% in his return of Income. It means it is the option given to the assessee & not to the Revenue to presume higher income of the assessee while making an assessment.
Is 44AD compulsory for 5 years?
Section 44AD(4) will attract the year when the assessee declares the profits less than 8% or 6%. The taxpayer will not be eligible to opt for a presumptive income scheme for the next five years.