• Transfer of Income from Pvt Limited Company to Sole Proprietorship Firm as expense!

I expect an income of around 1.4 crores this year via Pvt. Ltd. Company. I want to transfer the total income to Sole Proprietorship Firm as an expense.
I want to do that as I can exercise presumptive taxation (Section 44AD) on the income via Sole Proprietor Ship Firm. Also I will be paying a GST tax of 6% (composition scheme) from Sole Proprietorship Firm.
Is this a legally valid way?
Asked 9 days ago in Income Tax

Under GST presumptive tax of 6% only allowed for turnover upto Rs. 50 Lacs


To claim 6% / 8% profit under income tax you need to show expenses so directly you can not go for expenses unless expenses are reasonable proved else you need to maintain books of accounts and show actual profit

Vishrut Rajesh Shah
CA, Ahmedabad
857 Answers
34 Consultations

5.0 on 5.0

Under presumptive taxation scheme, tax is payable on 6%/8% of gross receipts or actual profit percentage whichever is higher.

Composition scheme is applicable upto the turnover of Rs.50 lacs.


For detailed discussion you may opt for phone consultation

Vivek Kumar Arora
CA, Delhi
4556 Answers
681 Consultations

5.0 on 5.0

Diversion of income  at source can be done if the transaction is properly structured and then there are no issues relating to corporate governance. 

B Vijaya Kumar
CA, Hyderabad
977 Answers
124 Consultations

5.0 on 5.0

Is this going to be the total revenue of your company?


What expense are you going to show in your sole proprietorship?


If you are going to just show 8% profit without any expense from bank and your bank has all 1.4 crore it could create an issue.


Hope you find the information helpful, if yes do rate if 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
4108 Answers
76 Consultations

5.0 on 5.0

You can pay the expense which should be appropriate to the fair market value. The expense you can pay as remuneration or professional fees. Normally, you can claim 6% if the income does not fall as the professional fees. 

Prerna Peshori
CA, Pune
117 Answers
1 Consultation

5.0 on 5.0

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