• Query regarding section 44ADA

I am earning entire income online, that is, it all comes into my account. Let's say my income is 48 lakh, so as per presumptive taxation under section 44ADA, I can pay tax on half of that amount, that is, Rs.24 lakh.

My question is: to avail this benefit under section 44ADA, does half of my income (Rs.24 lakh) need to have been withdrawn from my account?

In other words:

Say, I have earned 48 lakhs which has come into my account, and only about 5 lakhs have been withdrawn, and rest of the amount is still in my bank account, can I still pay tax on half of the income, that is, on Rs.24 lakh? Or is it necessary to remove half of the income from the account to consider half of the income as taxable income as per section 44 ADA?
Asked 1 month ago in Income Tax

Hi

 

No. It need not be withdrawn from bank account.

 

Section 44ADA offers presumptive taxation benefit thereby you can offer at least 50% of your gross receipts to tax. This is not an actual basis.

Lakshita Bhandari
CA, Mumbai
5475 Answers
551 Consultations

5.0 on 5.0

No need to withdraw remaining amount from bank.

You can avail the benefit of 44ADA and pay tax on 24 lacs. You have not shared the nature of your work. Might be you will be eligible for 44AD.

Pay advance tax to save interest.

 

For detailed discussion please take phone consultation.

Vivek Kumar Arora
CA, Delhi
4079 Answers
346 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

There is no need to withdrawn any amount from bank.

 

You can take the benefit of presumptive taxation scheme and pay taxes accordingly.

Payal Chhajed
CA, Mumbai
5084 Answers
157 Consultations

5.0 on 5.0

Hello,

 

The amount need not be withdrawn from the bank account.

Sec. 44ADA offers tax on the specified professional income on a presumptive basis considering at least 50% of your gross receipts as taxable income.

 

Regards,

CA Hunny Badlani

Hunny Badlani
CA, Madhya Pradesh
2555 Answers
9 Consultations

5.0 on 5.0

 

No you need not withdraw such amt .Govt gives you liberty to declare 50% as net profit & pay tax on it & avoid maintaining books of account. 

So if you feel your profit is less than 24 lac you maintain books get it audited & pay tax on it or pay tax on 50% of professional Receipt. 

Chirag Maru
CA, Raipur
207 Answers

5.0 on 5.0

The section says tax needs to be paid on 50% or actual profit whichever is higher.

It's better to pay tax on actual amount.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement. You can even book phone consultation for further personal assistance.

Thank you.

Naman Maloo
CA, Jaipur
3798 Answers
45 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA