Sir I am owner of a ultrasound and pathology clinic and running this business.I have hired a doctor and staff for ultrasound and pathology sample collection.I want to know should i file income tax under Section 44AD OR 44ADA? As i am running business and not a professional like doctor engineer.. Also i am very confused about section 44 AD because it mentions if gross receipts are under 2 crore you just have to declare 8% minimum and there will be no tax audit and requirement of maintaining records and books..So suppose if someone has gross receipts of Rs 30 lakhs and he shows 8% then it will come to Rs 2.4 lakhs which non taxable..How come this policy helps people.People can use it for tax evasion..Kindly clarify the scenario..Sec 44ADA is clear as you need to declare at least 50% of gross receipts which is understandable. Revert asap. Regards Ankur Dua
Hii Ankut Ji
you are eligible for 44AD not for 44ADA and declare profit 6%(in case of receipts from Banking Channel ) or 8% or more then no need of maintaining books of accounts and Audit. 6/8 % is minimum but you can show more then that
as per government if a business man showing profit 8% or more then it seems no tax evasion done but in this case your wealth must be equal to your declared income, in some cases person declare income @8% but having bank balance or exp. more then income.
Hi Ankur,
Thanks for the query !
Basis the description of the business shared by you, you are eligible for claiming the option of 44AD, provided the business consitution should be only one of the following:
1. Proprietorship Business
2. Partnership Firm
This option is not available to the companies or LLP.
The reporting of at least 6% in case the receipts are accepted in bank and 8% for cash transactions is required under this option. To give relief to the small taxpayers, this option has been put forward by the government so that they may save taxes up to total turnover of 2 crores. The tax planning definitely happens as people may choose this option. But the twist is, if once you move out of this option, you cannot go back.
Further, this tax planning is allowed because the government here assumes the profits at this percentage without any audit or certification. Previously, people used to report very low amounts hide their actual turnovers. To curb that law introduced this option.
Thanks & Regards,
Damini Agarwal
+[deleted]
Dear Madam My turnover in fy 2017 and 2018 is approx 13 lakhs only that means gross receipts.I had a net profit of Approx 4 lakhs only this year.So if i file Rs 13 lakhs at 10% presumptive income it comes to only 1.3 lakhs which is non taxable.The tax will be 0 or nil..SHOULD I GO AHEAD? Also i dont have anything to fill in sundry debtors loans but please tell me which sections are mandatory in financial particulars of business.Those E 11 to E 25 points. Thanks a lot..
Hi Ankur,
Yes you may go ahead with these amounts. However, please note that you have sufficient documents or proofs to substantiate that your turnover is correct.
Secondly, you may fill '0' in all the fields except bank/ cash balance. Fill the balance as on March 31, 2018 and the corresponding amount in partner's capital account to match the sides.
Thanks
Damini
You will fall under Section 44 AD since you are not professional. It is categorically professional who are falling under 44ADA.
Sec 44 AD tells you to declare minimum Net profit up to 8%. (Note it is minimum) So you can declare profit higher than that also. It is to restrict minimum Net profit. (It gives you lee way to not maintain books of accounts under Income tax except sales figure to justify your turnover achieved.)
File with what ever data is available with you.
These are new requirement which has been brought in current year only. But as per Provision of SEC 44AD, You are not mandated to maintain any books of accounts. Further under Section 44A also you do not fall under any requirement to maintain books. Thus their is no section under which you will be required to quote those financial particulars.
Dear Sir,
Section 44AD deals with prsemtive taxation for business where turnover is less than 2 crores and minimum total income would be 8% of total receipts. No expenses would be allowed. This scheme is available for small businessmen. No need to maintain books of accounts and audit of income declared is 8% or more otherwise required.
Section 44ADA is applicable for only specified professions which is not your case.
You can opt for presumptive taxation and needs to fill figure of sundry debtors,creditors, capital, bank and cash amount etc.
Thanks
Hi Ankur
You cannot opt for 44ADA as your services are not covered under professional services.
You can claim 8% profit under 44AD. 8% profit theory has been created to generalize the profit percentage for different businesses. Your actual profit may be higher but you may opt to pay taxes on 8% profits. You cannot claim any expenses or depreciation under 44AD.
Hi
You will be eligible for 44AD and can claim 8% profit. You cannot claim any expenses or depreciation under 44AD.
Regards,
Nikhil.
Hi Ankur,
Section 44AD is very litigative section. There is not much literature available on the same and your concern is absolutely valid that by declaring 8% profit it may lead to income mismatch after few years.
Say suppose 10 years down the line, your cumulative income in ITR will be 20 lacs whereas you would be holding assets more than 30-40 lacs. It may attract notices from income tax department. You may litigate with tax department and ultimately win also but cost and time involved in litigation is not worth it.
Hence, as a practical advice, i would advice you to refrain using this section and pay tax using normal provisions of the Act.
Please feel free to call/ revert in case you need more clarity.
Thanks and regards
Abhishek Dugar
CA CS B.Com
You can opt for 44AD i.e. presumptive Taxation scheme and can declare 8% (6% for digital payments) profit.
You only need to declare bank balance and cash balance and other fields can be zero.
Since you are not required to maintain books of accounts in these case so onus to proof the correctness of figure like turnover ,bank bal and cash balance is on you .
