I have a civil engineering degree, and after that I worked in digital marketing industry from 2 years now. Since 1 year I have been working on weekly billings but no contract (as a freelancer) for foreign clients only. Am I eligible for section 44ADA under business management, technical consultancy or engineering? under codes 16013 or 16005? My Invoices mainly show description as project management and very few as social media services, however I am open to editing them and changing to consulting services just to show as there is no TDS, and if that helps in my falling under 44ADA. Or even raise the future invoices with other description. Or is there any other way around, my day to day work involves managing IT website projects, marketing projects, social media projects, etc. I also plan in future to extend into data analytics. How are all the details cross checked with my work really? how does one qualify into 44ADA
In my opinion 44ADA is only applicable for a specific group of professional and not to everyone and the services that you are providing does not qualify for 44ADA hence in my opinion you could even take benefit of 44AD. However, if you future plan is to go into data analytics then it could qualify for technical consultancy and accordingly 44ADA. Hence, you can decide about choosing a code based on your long term goals.
Regards,
Eligibility for Section 44ADA: Your eligibility hinges on classifying your work as "technical consultancy" given your engagement in digital marketing, IT website, marketing projects, and social media project management, with plans to expand into data analytics. However, Section 44ADA applies to professionals with a gross turnover or receipts up to INR 50 lakh in a financial year, allowing them to declare 50% of their turnover as presumptive income. Engineering or business management might not directly apply unless your work specifically involves engineering services.
Cross-Checking Work Details: Tax authorities may review service descriptions, qualifications, and service relevance to Section 44AA(1) categories to verify work nature. The authenticity of your professional activities is key for qualifying under Section 44ADA.
Qualifying into 44ADA and Profit Declaration: To qualify under 44ADA, your professional activities must genuinely align with services categorized under Section 44AA(1), with a gross turnover or receipts not exceeding INR 50 lakh. By opting for this section, you're required to declare 50% of your gross receipts as income, which simplifies tax calculations by avoiding detailed expense records. Given your move towards technical consultancy areas like data analytics, your eligibility might be enhanced. Consulting a tax professional is advisable for accurate assessment.
For detailed, personalized advice, consider a phone consultancy.
Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.
Thank you.
Shubham Goyal
@Naman Sir, @Shubham sir, currently my gross turnover is lesser than 20L. Is there a way I can make myself eligible for 44ADA section? My current expenses are quite low, profit more than 80%, hence looking for this option. As for 44AD, I will have to consider my entire profit right for income tax? or can I show 8% as well?
Yes, with a gross turnover under 20L ,you are eligible for Section 44ADA. You can declare 50% of your gross receipts as presumptive income under this section, even if your actual profit is higher.
For Section 44AD, you can declare 8% of your turnover as your income if the transactions are in cash, or 6% for non-cash transactions, irrespective of your actual higher profit percentage. However, you have the option to declare your higher profit for taxation if it's more beneficial for you
For detailed, personalized advice, consider a phone consultancy.
Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.
Thank you.
Shubham Goyal
- Section 44ADA is applicable to specified profession. 50% of gross receipts is considered as minimum income as income from profession
- Section 44AD is applicable to business and non-specified profession. For receipts received in cash, 8% of gross receipts is considered as minimum income. For receipts received through digital mode/account payee cheque, 6% of gross receipts is considered as minimum income
For detailed discussion you may opt for phone consultation
You can show the profit ratio of 44ADA in 44AD as well. Both the section says that you can show actual profit or 50% or 8% whichever is higher.