• Professional tax - 44 ADA applicability

Hi I am looking to understand applicability of presumptive tax - 44 ADA on my professional consultancy services and need CA support for gst and tax filing against the same.
Asked 6 years ago in Professional Tax

Please let us know what kind of professional service do you provide and what is your qualifications.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

HI,

In the past professionals were kept out of the presumptive taxation scheme. Which means they necessarily had to maintain some form of accounting records and pay tax accordingly. In the Budget 2016, govt has extended presumptive tax benefit to professionals as well. Professionals with receipts of less than Rs 50lakhs can take benefit of this. Therefore, doctors, lawyers, interior designers, architects etc can now opt for this scheme if their annual receipts are less than Rs 50 lakhs.

Under this scheme, 50% of the receipts have to be shown as profits and tax paid thereon. Those who opt for this scheme, do not have to maintain accounting records or get audit done, they are also exempt from payment of advance tax. The advance tax can be paid in total by 15th March of the financial year to avoid interests.

To check whether this scheme is applicable to you, please describe the nature of your consultancy services.

Also, post this, I can assist you in all types of compliance with respect to Income tax as well as GST related works.

Thanks

Damini

Damini Agarwal
CA, Bangalore
405 Answers
31 Consultations

5.0 on 5.0

HI,

This scheme is always an option to you. You can choose the regular filings.

But it is advisable to choose this as it helps in lot of savings in terms of tax. You are not required to prove that your actual expenditures are 50%. As per this scheme, it is presumed that your expenditures are upto 50%.

Moreover, if you go by regular filings and choose not to opt this, the you have the following two options:

1. Offer income more than 50%.

OR

2. If you offer less than 50% then you will have to get your accounts audited.

Apart from this, the recent amendment has been made with respect to this scheme for 5 years clause. Hence once you opt for this scheme, you cannot go back. In case you you choose not to go with this in any of the subsequent years then lock-in period of 5 years begins. But that's more of trap because every year when you are not able to file return under this scheme due to lock-in period, this 5 year period will keep on extending with each passing year.

Hence its advisable to stay with it till you cross the threshold. Apart from this, if you go for salary income after two years of this scheme, then you need not worry because in those years your ITR will completely change and you are not opting out of the scheme in those years by choice. Instead the same is not applicable to you.

Thanks & Regards,

Damini

Damini Agarwal
CA, Bangalore
405 Answers
31 Consultations

5.0 on 5.0

Hi Rakesh,

Yes, you are eligible for section 44ADDA.

You dont need to maintain books of accounts and you dont need to actually spend 50% of your income. You can also take a job whenever you want.

We can help you in all income tax and GST related filings. Please drop in a line at caabhishekdugar@gmail.com.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

You can avail the benefit of 44ADA.

You dont need to maintain books of accounts and there is no mandate to spend 50% of your income.

Also there is no restrictions in case you want to take up a job few years down the line.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Sure

Damini Agarwal
CA, Bangalore
405 Answers
31 Consultations

5.0 on 5.0

Ok

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

50% of your gross receipt will be considered as income and taxes will be payable on 50%.

No need to maintain books of accounts for the same.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

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